Transcript of a Press Briefing by Gerry Rice, Director, Communications Department, International Monetary Fund
IMF News, May 9, 2013
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- Published: May 9, 2013
Overview
- Date and location: Washington, D.C., Thursday, May 9, 2013.
- Speaker: Gerry Rice, Director of the Communications Department.
- Briefing embargo: embargoed until 10:30 a.m., Washington time.
- Format: opening announcements followed by questions from the room and online; webcast available.
Management travel and events (announcements)
- Christine Lagarde, Managing Director: speaking at the Global Investment Conference in London "within the next couple of hours" (open to media).
- Managing Director and First Deputy Managing Director, David Lipton: attending the G-7 Ministerial Meeting outside London (tomorrow and Saturday).
- First Deputy Managing Director, David Lipton: attending Bank of International Settlements meeting in Basel on May 12 and 13.
- Deputy Managing Director, Min Zhu: in Bishkek on May 20 for the launch of the Caucasus and Central Asia Economic Outlook update; attending the Middle East World Economic Forum in Jordan from May 23 to May 26.
- Research Department, Monitoring Capital Markets Department, and European Departments conference: "Financial Structure: The Issues" on Friday, May 17 (agenda available on IMF website).
- Middle East Regional Economic Outlook update: presented by Masood Ahmed in Dubai on May 21.
- Recent launches: Regional Economic Outlooks on Africa, Asia, Latin America, and others published in recent weeks.
- Recent issuance: joint statement from the European Central Bank, the European Commission, and the IMF concerning the 10th Review in Ireland issued "in the past few hours."
Egypt
- Context: At the Spring Meetings (two weeks prior), the Managing Director and Egyptian authorities issued a joint statement noting further progress and that work would continue to reach agreement on an IMF standby arrangement to support Egypt's national economic program.
- Current status:
- IMF is awaiting updated economic data and reform plans from the Egyptian authorities.
- Staff is working from headquarters, building on work advanced during the April mission.
- No new mission has been discussed or scheduled at this stage.
- IMF stance:
- Stands ready to support a "home-grown program" that is socially balanced, has broad ownership, addresses rising fiscal and balance-of-payments imbalances, and restores confidence for implementation.
Greece
- Background: Staff Level Agreement on the 3rd Review reached on April 15; statement published then.
- Status and timing:
- Progress has been made resolving remaining technical issues and completing prior actions required before review conclusion.
- IMF Executive Board is expected to meet on May 31 to discuss the completion of the 3rd Review.
- Contingent on Board approval, the next disbursement is expected to take place shortly after the May 31 meeting.
- Debt outlook:
- IMF projections show further debt relief will be needed for Europe to meet its commitment to reduce Greek debt to a sustainable level: "124 percent by 2020, and to substantially below 110 percent by 2022."
- European partners have committed to provide additional debt relief if Greece meets its fiscal targets and expect to review the case by the end of this year.
- Possible forms of debt relief include more generous loan terms or outright transfers.
- IMF does not envision new OSI discussions "at this juncture."
Cyprus
- Background: IMF and European partners reached a Staff Level Agreement with Cypriot authorities on April 3; statement published then.
- Timing:
- IMF Executive Board is expected to meet on May 15 to discuss the request for the program.
- Contingent on Board approval, the first disbursement is expected to take place shortly after that May 15 meeting.
- IMF message: Working with European partners to support Cyprus in overcoming economic challenges and restoring sustainability, growth, and jobs.
Italy
- Government signaled intention to stick to fiscal commitments to the European Union.
- IMF view:
- Fiscal policy should target a structural balance that takes into account economic conditions.
- Fiscal adjustment should be more growth-friendly by rebalancing composition toward expenditure cuts and lower taxes.
- Any tax reforms should be part of a comprehensive strategy to make the tax system more efficient and fair.
Euro area cooperation and the troika
- IMF enjoys "excellent cooperation" with the European Commission and the European Central Bank.
- Executive Board oversight: IMF actions are overseen by its Executive Board, which is independent; European institutions are similarly accountable to their stakeholders.
- On the troika: reports indicate Mr. Asmussen (ECB) did not advise changing the troika system "right now."
- Banking union:
- IMF has consistently said progress on the banking union agenda is essential to address financial market fragmentation in the euro area.
- A single-resolution mechanism is a critical element.
- IMF looks forward to the European Commission proposal on the single-resolution mechanism "by the summer," as indicated by recent EU Council decisions.
Pakistan
- Context: Pakistani delegation met Fund at the Spring Meetings to discuss difficult economic challenges.
- Status and timetable:
- No formal request for a program has been made by Pakistan.
- IMF remains closely engaged.
- A staff team is planning to visit Islamabad in late June to continue policy discussions on mitigating economic vulnerabilities.
Slovenia
- Government pursuing an ambitious agenda: fiscal consolidation, financial sector restructuring, privatization, pension and labor market reforms.
- Economic situation:
- Economy remains in deep recession due to a severe credit crunch and widespread corporate insolvency.
- Priority: recapitalizing the three largest banks and cleaning up their balance sheets.
- IMF view: It is important the government follows through on the agenda to build confidence and resume growth.
Portugal
- Recent successful bond issuance: an important step toward regaining complete market access.
- Next steps:
- A joint IMF-EU-ECB mission is in Lisbon for the 7th Review of the program.
- The mission will assess measures recently announced by the government to complement the medium-term fiscal strategy and to replace measures previously rejected by the Constitutional Court.
Yemen and energy subsidies
- No specific response on Yemen in the briefing.
- IMF reference: broader IMF policy paper on energy subsidies issued "a number of weeks ago" outlines the IMF's broad position on energy subsidy issues.
Fiscal policy stance and research debate
- IMF position on fiscal policy mix and pace:
- With growth and employment weak in many countries, "getting the pace of fiscal consolidation right is of the essence."
- Countries with material market constraints need to sustain consolidation; elsewhere adjustment should be at an underlying pace that balances deficit reduction and support for growth.
- Fiscal targets should focus on structural measures rather than nominal deficits.
- Importance of the right mix of fiscal, monetary, and structural policies.
- On the debate over the "90 percent redline" of debt-to-GDP (referring to recent research critique): IMF emphasizes balancing pace and mix rather than adopting a single mechanical rule.
- Article IV missions:
- Example: The U.K. Article IV mission had just begun; Concluding Statement will be issued after about two weeks of work.
- General practice: IMF does not comment on discussions underway during Article IV missions.
Communications and next steps
- Concluding Statements and Article IV Staff Reports:
- The Article IV Concluding Statement for Greece contains detailed policy measures and actions; the full Article IV Staff Report will be published after it goes to the Board.
- Follow-up:
- Media relations team may follow up on specific country questions (e.g., Yemen) after the press conference.
- Closing: Gerry Rice thanked participants and noted he looked forward to seeing them "in a couple of weeks' time."
Transcript of a Press Briefing by Gerry Rice, May 9, 2013.