Transcript

Assistant Director, External Relations Department
International Monetary Fund
Washington DC
Thursday, October 19, 2006

MR. HAWLEY: Hello, ladies and gentlemen. I am David Hawley, Assistant Director in the IMF's External Relations Department, and welcome to those of you in the room and those of you on the online Media Briefing Center to this, one of our regular briefings for the media. As usual, the briefing is under embargo, and the embargo is 11:00 a.m. Washington time; that is 1500 GMT.

Those of you on the Media Briefing Center may wish to submit your questions now, so that we get a good chance to answer them. I have one or two questions already.

Before I take your questions, I would like to make one or two announcements.

The IMF will launch its Regional Economic Outlook for the Western Hemisphere in Mexico City on November the 2^nd during the 11^th Annual Conference of the Latin American and Caribbean Economic Association, or LACEA. The event will be held at the Instituto Tecnológico Autónomo. More details of this event will be made available nearer the time, but I can tell you today that Anoop Singh, the Director of the Western Hemisphere Department, will present the report, together with a panel of eminent Latin American economists including Ilan Goldfjan, a former central bank director in Brazil, and Mauricio Cardenas, the incoming President of LACEA, and Alejandro Werner, the head of the Economic Planning Office at Mexico's Finance Ministry.

Later today, the IMF will be opening for public comment the revisions to the IMF's Code of Good Practices on Fiscal Transparency, which has been updated and broadened to reflect recent practices in this field. As you know, fiscal transparency makes a major contribution to the cause of good governance and can lead to better informed public debate about the design and results of fiscal policy. Persons interested in commenting on the code are encouraged to visit the IMF's web site, IMF.org, where a survey will be available. The revised code will be open for comments until November the 17^th.

Finally, let me announce a forthcoming visit to South Africa and Mali by John Lipsky, the IMF's First Deputy Managing Director. Mr. Lipsky will visit South Africa from November the 5^th to November the 7^th, and he will be in Mali from November the 8^th to the 10^th. This is Mr. Lipsky's first visit to Sub-Saharan Africa since becoming the First Deputy Managing Director on September the 1^st.

In South Africa, he will discuss policies for strengthening the financial sector in Africa and its contribution to growth and development at a seminar with finance ministers and Central Bank officials from South Africa and several countries in the region. The seminar will be in Pretoria on November the 7^th, and it is jointly organized by the IMF and the U.K.'s Department for International Development, DFID. It will be attended, in addition to those officials I have mentioned, by regional financial sector representatives and senior officials from the World Bank Group. Mr. Lipsky will also meet with the South African authorities and with private sector, labor, and civil society representatives.

In Mali, he will attend a seminar jointly sponsored by the IMF and the French Development Agency, Agence Française de Développement, on scaling up and promoting growth in the West African Economic and Monetary Union. Like the event in South Africa, this will be a regional conference on this occasion in Bamako on November the 10^th, and it will be attended by finance ministers from the WAEMU region in addition to private sector representatives, NGOs, donors, and the media. He will also meet the Malian authorities and legislatures and visit in the country and travel in the country including to projects that have benefited from debt relief under HIPC initiative.

He will have media availability in both countries, and we will give you more details of that closer to the time.

On the subject of Mr. Lipsky, I will do a brief advertisement. He gave a wide-ranging interview to the IMF survey -- it was published earlier this week -- and he discussed a range of institutional issues facing the IMF. You might find it worth a look. It is also available on the IMF web site.

With those announcements, I am happy to take questions. I will start, if I may -- I see Leslie raising her finger -- with one from the Media Briefing Center.

I have a question on a reaction to the rating announcement on Italy, and I will respond that, in general, we have no comments on rating agency decisions, but I would note that in the medium term, as we have said before, the authorities in Italy should commit to a credible path of debt and deficit reduction based on durable expenditure-reducing measures.

The same questioner asks: What is your evaluation of the Italian Government's draft budget? We have not yet had the opportunity to examine the budget in detail, nor to discuss this 2007 draft budget with the authorities. We, however, look forward to doing so during the Article IV which is scheduled for November. We continue to believe that adjustments should be based on structural reforms covering key expenditure areas.

Thank you. I can now take a question in the room.

QUESTIONER: Staying in the same area, this is about Turkey. An IMF mission has been there, and they are saying that Turkey's spending is too high and want it reduced. How close have you come to an agreement in Turkey on any of this? In general, how did the mission go?

MR. HAWLEY: The mission has not yet concluded. There is, as you say, a mission which is in Turkey for the fifth review of the standby, and it will conclude its discussions on October the 20^th, tomorrow. Talks have focused primarily on fiscal policy, and in this area, progress has been made. The authorities have drawn up a 2007 budget consistent with a public sector primary surplus of 6.5 percent of GNP and are putting in place safeguards to contain government expenditures this year and next. This is a positive step, but there are a number of other policy issues to be discussed. As always, any understandings between the mission and the authorities, the Turkish authorities in this case, are subject to review and endorsement by the IMF's Management and Executive Board. At the moment, that is, I am afraid, all I have got on the Turkey mission.

QUESTIONER: Regarding the Regional Economic Outlook that came out the other day for the Middle East, there were numbers there on Iraq, projecting growth of 14.4 percent next year after growth of 4 percent this year, though throughout the report it speaks of nothing really going well for the Iraq economy. Is this kind of a guess, hoping that things stabilize, or what goes into that 14.4 percent growth estimate?

MR. HAWLEY: I am afraid I have got nothing specific to add to what was in the REO comment on Iraq. The best I can do is to offer to have someone come back to you with more detail on the thinking behind that projection.

[The growth forecast for 2007 will depend on Iraq's ability to generate investment amounting to some 30 percent of GDP in total. To the extent that the investment cannot be undertaken, growth will be lower. As Box 3 of the latest Regional Economic Outlook notes, significant challenges remain for Iraq in pursuing its program of economic stabilization and reform.]

QUESTIONER: David, do you have an exact day when the paper on the IMF quotas and vote performance is going to go to the Board?

MR. HAWLEY: As Masood Ahmed, I believe, in the last briefing a couple of weeks ago said, the timeline for the developments on the further work on the quota and voice package has not yet been firmly set. I can repeat what he said, that with the discussion of the work program in the Executive Board which will be I guess in the middle of next month, we should have a clearer idea of the timeline, and perhaps at that point we can give you more on that issue.

QUESTIONER: A follow-up: Would you expect that to go before or after the G-20?

MR. HAWLEY: I prefer to wait until we know a little bit more.

Are you talking about the work program, sorry?

QUESTIONER: More the other paper.

MR. HAWLEY: On the other paper, I can't give you any sense, I am afraid, of timing. The work program, I think, will be before the G-20.

QUESTIONER: Following up the question on the Italian budget, two weeks ago, Masood's answer to the same question sounded a little more expanded and positive than your answer right now. Does this mean that you are worried about the debate going on in Italy or is the answer two weeks ago still valid?

MR. HAWLEY: I believe the statement I have just given you represents our current view. I don't want to be drawn into a characterization of the tone of my remarks versus Masood's, but I am not aware that you should be detecting any difference between us.

QUESTIONER: Prior to the meetings, the Managing Director had said there was a possibility that countries would come together at the meetings and discuss another multilateral surveillance program and other areas of interest. Was there any progress on that? Have there been any other programs for surveillance launched or is there anything in discussion?

MR. HAWLEY: This, I take, is a question on the multilateral consultations procedure which, as you know, is underway in the context of the first such procedure, the review of the global imbalances. That work is underway. We have not yet agreed with the membership on what the subject of the second multilateral consultation would be.

QUESTIONER: So you had the bilateral discussions, right? Has there actually been a formal meeting after those bilaterals on the multilateral consultations?

MR. HAWLEY: I am afraid I have got nothing fresh for you today on multilateral consultation.

Do we have any more questions?

In that case, I will draw this briefing to a close. Thank you very much.

A reminder, the embargo is at 11:00.

Thanks a lot, ladies and gentlemen.