## Transcript of a Press Briefing with Gerry Rice, Director, Communications Department

_IMF News, May 19, 2016_

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## Bibliographic details
- Published: May 19, 2016

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### Logistics, announcements, and upcoming events
- Briefing date and location: May 19, 2016 — Washington, D.C.
- Webcast: briefing was on the record and under embargo until 10:30 a.m. Washington Time.
- IMF communications contacts provided: Media Relations E-mail: media@imf.org; Phone: 202-623-7100.
- Senior staff engagements announced:
  - Managing Director Christine Lagarde: attending G7 Finance Ministers and Central Bank Governors meeting in Sendai, Japan (officially May 20 and over the weekend), then G7 Leaders Summit on May 27; visit to Kazakhstan between meetings.
  - First Deputy Managing Director David Lipton: delivering the Peterson Institute Annual Niarchos Lecture on Tuesday, May 24.
  - Deputy Managing Director Min Zhu: speaking at the Third Annual Asian Policy Forum on May 27 in Singapore; keynote at the Bank of Korea International Conference on May 30–31 in Seoul.
- New IMF briefing room announced (more expanded media room).

### IMF engagements, missions, and procedures
- Article IV and program review timing: IMF staff will conduct Article IV mission to Portugal in June 2016.
- Mozambique: staff visit to Maputo planned for June 2016 (mission originally scheduled for April and May was delayed because of disclosure of previously undisclosed borrowing).
- Angola: IMF received a formal request to initiate discussions on a three-year extended arrangement; IMF team preparing to visit Luanda in the near future.
- Ukraine: staff-level agreement reached on the review; Board consideration expected in July 2016; the next IMF disbursement is for one tranche (not bundled), with the amount believed to be around $1.7 billion (to be verified by IMF team).
- IMF Board: decisions on participation in programs would be taken by the Executive Board; the Board is being kept regularly informed.

### Country-specific updates and policy notes
- Portugal
  - Article IV mission scheduled in June 2016 to address budget and repayment questions.
- Mozambique
  - Context: authorities confirmed undisclosed borrowing during the Spring Meetings.
  - IMF stance: undisclosed debt-related transactions must be reported transparently and publicly.
  - Next steps: mission to Maputo in June 2016 to gather facts, conduct due diligence, and assess macroeconomic implications; decisions on program support or conditionality to follow mission assessment.
  - On the question of a bailout: contingent on PSI review and mission discussions.
- Angola
  - Formal request received for discussions on a three-year extended arrangement; initial discussions held during Spring Meetings; mission to Luanda planned.
- Iraq
  - A standby agreement announced (amount cited by questioner as $5.4 billion); IMF had no detailed additional information beyond the public communication at the time of the briefing.
- Brazil
  - IMF view: announcements by Finance Minister Meirelles were viewed positively.
  - Policy advice emphasized: strengthen the macroeconomic framework (inflation targeting, exchange rate flexibility, fiscal responsibility); stabilize debt trajectory; preserve social security through reforms ensuring long-run financial sustainability.
- Spain
  - Economic outlook and challenges highlighted:
    - Growth reached 3.2 percent in 2015.
    - Growth projected at 2.6 percent in 2016.
  - Concerns: constrained growth potential, sizable public and private debt overhang, weak productivity growth, high structural unemployment.
  - IMF readiness: ready to work with any government emerging from elections.
- Ukraine
  - IMF statement: Ukraine has made considerable progress restoring macroeconomic stability; continued need for steadfast implementation of structural and institutional reforms, enhanced transparency and rule of law, and reform of large state-owned enterprises.
  - Board consideration of the review expected in July 2016.
  - Tranche: staff indicated the Board consideration involves one tranche.
  - Estimated amount mentioned for IMF disbursement: around $1.7 billion (team to verify).
- Italy
  - IMF noted the EC decision to grant flexibility under the Stability and Growth Pact; IMF view that flexibility should be used as warranted.
  - 2016 Article IV mission on the ground in Rome; press conference scheduled for Monday afternoon in Rome.
- Suriname
  - Authorities requested IMF assistance for a comprehensive stabilization and recovery program.
  - IMF supports gradual elimination of electricity subsidies to allow better-targeted social spending and improve the fiscal situation.
  - Board consideration of Surinamese request expected in the coming weeks.
- Malawi
  - IMF team visited Lilongwe in March 2016 in the context of the seventh and eighth reviews under an Extended Credit Facility (ECF).
  - Program performance: concerted effort to get the program back on track; domestic financing and asset issues addressed; financial-sector reforms and public financial management improvements (including bank reconciliations) progressing but need to be sustained.
  - IMF Board approved an extension of Malawi's arrangement under the ECF until June 30, 2016 to allow more time for structural measures.

### Greece — status of discussions, IMF position, and next steps
- Context:
  - Discussions ongoing among Greece, its European partners, and the IMF in the context of the first review of Greece's ESM program.
  - Greece is not currently under an IMF program, but the IMF is fully engaged in discussions.
  - No proposal has been submitted to the IMF Executive Board at the time of the briefing.
  - Recent Eurogroup meeting occurred on May 9; next Eurogroup meeting scheduled for May 24.
- Core IMF position and requirements for IMF financial participation:
  - Program must "walk on two legs": (1) credible, strong policies underpinning realistic targets; and (2) comprehensive debt relief.
  - Both credible policies and substantial debt relief are essential for Greece to achieve sustainable public finances and growth.
  - The IMF put the debt relief issue on the table almost a year prior; welcomes the start of discussions on debt relief.
- Debt relief and DSA (debt sustainability analysis):
  - IMF has not finalized its DSA.
  - IMF exchanged preliminary views with partners on general principles regarding debt relief objectives and modalities.
  - IMF view: restoring debt sustainability may be possible without upfront haircuts by providing very concessional loan terms (including long grace and maturity periods and very low interest rates).
  - IMF highlighted the potential role of exchanging more expensive/expansive debt for less expansive debt to increase concessionality of official financing.
  - IMF not aware of specific discussions on ESM buying out IMF debt or IMF buying Greek debt; not aware of discussions on IMF taking a purely monitoring/advisory role without financial participation.
- Fiscal targets and reforms:
  - IMF view: achieving a 3.5 percent primary surplus by 2018 is very ambitious and unlikely to be sustainable for decades; such a level would imply excessive austerity and risks falling disproportionately on the poor and vulnerable.
  - To make ambitious ESM fiscal targets credible, IMF sees need for fundamental reforms to:
    - Pensions (addressing very generous benefits).
    - Income taxes (addressing large exemptions that are exceptional by European standards).
- Timing and process:
  - IMF invited to Eurogroup discussions; Poul Thomsen expected to lead IMF participation in the May 24 meeting.
  - IMF staff indicated readiness to present a program for the Board once the program includes necessary policies and debt relief that make the program realistic and add up.
  - No decision on IMF participation until a program that meets IMF objectives and principles is presented and considered by the Executive Board.
- Specific numeric and timing references in the Greece discussion:
  - Target primary surplus cited in IMF commentary: 3.5 percent by 2018 (described as ambitious).
  - Historical reference to alternative target: 1.5 percent of GDP mentioned in questions; IMF reiterated view without endorsing sticking to that number for decades.
  - Possible long grace and maturity periods discussed in general terms; a 2040 date was raised by questioners as an example but IMF did not endorse specific dates.
- Equity and institutional considerations:
  - IMF emphasized uniformity of treatment among member states and the importance of credible reforms and credible financing for program integrity across the IMF’s 189 members.

### Key numeric values and dates cited in the briefing (preserved exactly)
- Briefing date: May 19, 2016.
- Embargo lift time: 10:30 a.m. Washington Time.
- Senior staff events:
  - David Lipton lecture: May 24.
  - Min Zhu speaking: May 27; Bank of Korea keynote: May 30, 31.
- Spain growth figures:
  - 3.2 percent in 2015.
  - Projected at 2.6 percent in 2016.
- Greece fiscal target cited:
  - 3.5 percent primary surplus by 2018.
- Ukraine IMF tranche estimate:
  - around $1.7 billion.
- Iraq standby agreement amount referenced by questioner:
  - $5.4 billion.
- Malawi ECF arrangement extension:
  - until June 30, 2016.

*Source: Transcript of a Press Briefing with Gerry Rice, Director, Communications Department, May 19, 2016.*

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## References

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_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr051916_