Transcript of a Press Briefing by William Murray, Deputy Spokesman, Communications Department, International Monetary Fund

July 25, 2013

Washington, D.C.
Thursday, July 25, 2013
Webcast of the press briefing Webcast

MR. MURRAY: Hello, I'm William Murray, Deputy Communications Spokesman at the International Monetary Fund in Washington. This is one of our regular briefings. It's embargoed until 10:30 a.m., Washington time, that's 3:30 p.m., GMT. As usual, let me cover a couple of quick housekeeping items, and then I'm going to take questions from the journalists here in the room, and those of you that are watching by the online press center.

First of all, we have a very, very heavy schedule of Article IV discussions at our executive board between now and early August. At least a dozen are being discussed or will be published. Actually, today we published the Euro Area Article IV consultation. There was a conference call prior to this briefing on the Euro Area. We'll also release the report on Spain next week and, also, we do next week at the board have our review on Greece. That's Monday of next week. Media relations will get back to you with a full list of timing and detail.

One thing to keep in mind, and this segues into the next item that I want to flag to you. One of the innovations we've had in our Article IV Consultations, and in our staff reports over the last year or so, is inclusion of spillover analysis. They tend to be reflected in annexes that are attached to the staff report. That was the case in the U.K. article IV staff report that was recently published. So, that's one of the areas of extended surveillance that the fund is doing at the moment and communicating publicly. We've been doing spillover analysis, but we're deepening it, and we're trying to do a better job of communicating publicly some of that analysis.

That gets to my next point which is on August 2, we will publish our latest spillover report which basically ties together our findings on countries that are viewed as systemically important -- numerous countries. In addition, combined with that publication will be the latest pilot external sector report. That's an analysis that's perceived as systemically important. Those two reports, the external sector report and the spillover report will be public by August 2.

The next bit is our executive board goes into its annual summer recess, starting the week of August 5. The board will be in recess for two weeks. We are planning to hold our next communication press briefing here at IMF headquarters on August 15, so mark that in your calendar. We will be opening press registration for the IMF/World Bank annual meetings that are held in Washington, starting with the International Monetary and Financial Committee Meeting, policy guiding body, here at IMF headquarters on October 11 and 12. There are a number of events surrounding that, and also the Board of Governors meeting again in mid-October. Registration opens August 12.

I think that's all I have for now, and I'm going to start with questions here in the room. Please.

QUESTIONER: I wanted to ask about the Argentinean case, and the various statements over the past week. Could just clarify for us the concerns about the precedent? Could you just expand a little bit on what the worry is for the IMF? The precedent could do what in the future to debt-restructuring in other countries?

MR. MURRAY: Okay, let me first make the point—I'm going to read this. This is a statement that we've issued by e-mail to journalist on an “as requested” basis. But I'm going to read this to you for the benefit of everyone.

This is a statement that we issued on Tuesday, July 23, after consultations with the IMF's Executive Board. It's as follows: the IMF's Managing Director has withdrawn her recommendation that the IMF Executive Board file an Amicus Curiae brief in the Argentina case, following the U.S. authorities' decision to no longer support the filing at this stage. The Managing Director's recommendation was premised on U.S. support, as it would not be appropriate as a legal and policy matter for the IMF to file this brief without that support. The IMF's management and staff remain concerned about the broad systemic implications that the lower court decision could have for the debt restricting process.

The other point I also want to make clear, and we have shared this with journalists, is the following: it would not be appropriate for the IMF to file this brief without U.S. support for two reasons. First, the Fund has a duty of neutrality in disputes involving its member governments. The lack of U.S. support means that the filing could potentially place the fund in the middle of a dispute between two Fund members which would breach this duty of neutrality.

Second, the lack of U.S. support in this case could undermine the effectiveness of the fund's filing. So, those are the basic points that we have made in the context of our consultation with our executive board this week.

In the context of your question, there is one thing I've got to remind you about in terms of the fundamental reason—it has nothing to do with Argentina. This has to do with the principles of the policy implications of a particular legal case and our desire to make that clear. The main thing is that all countries should have flexibility on debt-restructuring. If that flexibility is compromised, that has potential global financial stability and systemic implications, and that's really what it boils down to.

QUESTIONER: Something that has to do with Argentina. So, was it just the U.S. that was opposing it then? Was the rest of the board in support of filing this brief?

And second question, since the MD had spoken about it at the G-20, it seemed pretty safe at the time to think that she had support from the U.S. Did the U.S. tell you why they changed their mind?

MR. MURRAY: On the second question about the U.S., you really have to go to the U.S. Treasury and ask them to explain their decisions. We are not going to do that. So, I just want to make that clear. It's really up to the U.S. to decide what it wants to do in explaining its views. The point is we remain fundamentally concerned about the lower court decision, although we could not effectively proceed with an amicus brief at this stage. I'm not going to get into the tick-tock, but there was a discussion with our Executive Board in great detail on Tuesday. And the recommendation by the managing director to withdraw took place.

QUESTIONER: I have two questions. The first one is: you say that the Managing Director withdrew the recommendation at this stage. So, I would like to know if you are planning to get involved in the case in the future, or if you are planning to present any brief or documentation, as maybe the next step.

My second question is, in the same statement you said that for the Fund, it remains the big concern. When you talk about the fund, it means that there is a kind of consensus in the institution about this concern among all of the members? Thank you.

MR. MURRAY: Thanks. On your first question about what next, I don't have anything specifically for you on that. No decision has been made, so that's where things stand. I don't have anything to add.

In terms of consensus within the building, I don't think I'm in a position to characterize every member's views. But certainly we know that one member did not support the filing, but that they also stated. I think you've seen the Treasury statement, I've seen the Treasury statement. They have concerns as well. But I think you should go to the U.S. and other authorities to find out what their specific concerns are regarding this case. We have stated our concern which is that fundamentally, countries need flexibility when they are in a position of unsustainable debt. So, that's the point of our filing.

QUESTIONER: One thing on Argentina. The treasury statement did seem to leave open the possibility that they would take a position later on. I think the statement said that we don't want to file a brief at this time, but should the court ask us for our opinion, we may weigh in in the future—I'm paraphrasing. So, hypothetically, if the U.S. was to weigh in on the side of Argentina, where it was in the appeal, could the IMF then revisit the issue and perhaps file a brief at that time?

MR. MURRAY: If you get the answer from treasury what they intend to do, let us know. We're not going to get into hypotheticals. This is a legal case. We're not going to get into speculation at this stage. And let me remind you—remember what I said, the managing director has withdrawn a recommendation, and it would not be appropriate for the IMF to file this brief without U.S. support. That's basically my point.

I think I've pretty much covered what I'm going to say today on Argentina. I understand why you're interested, and it's an important issue and we fully sympathize with that.

There are two Argentina questions on the online press center. I want to read them out, at least for the record:

“According to the Argentinean authorities, the progress and the creation of a new CPI has the fund's support. Can you say whether the IMF thinks that the work of the INDEC in the matter has been satisfactory?”

Thanks for bringing that question up. You know, we have a process in place. The Executive Board will review Argentina's data situation in November. That still is in-train, and we remain in contact and working with the Argentinean authorities on CPI and GDP, the quality of their CPI and GDP data. That's what I have at this point.

I have another Argentinean question:

“Why was it necessary to get the support of U.S.A. in order to file an Amicus Curiae in favor of the U.S. Supreme Court reviewing the Argentinean case? Brazil said that Ms. Lagarde should have discussed her recommendation with all the countries. Why did she decide not to do it?”

I've got to correct the record here. The premise of this question is completely flawed. There were detailed discussions with the executive board on Tuesday of this week about this case.

QUESTIONER: About a week ago China has taken some steps on its financial reform. Does the IMF have some latest evaluation on that?

MR. MURRAY: Obviously, we have to do a complete evaluation. We have ongoing discussions with the Chinese authorities on the quality of Chinese economic output. I do have a line to offer you on the recent stimulus measures that the government announced yesterday, so let me give you that. While we haven't really seen the full details of these measures and haven't discussed them with the authorities at this stage. The measures do appear to be in line with the government's reform agenda of streamlining—administer procedures and encouraging growth of small and medium enterprises, and also improving the business climate in China. So, that's something that we want to note. Also, the recent interest rate deregulation is also something we welcome, and we hope to see those trends continue.

QUESTIONER: As you know, the prime minister of Greece announced recently the reduction of VAT. My question is why the IMF accepted the reduction now and not two months ago? Did you do it because, for example, you believe that Greece is on the right track?

MR. MURRAY: The Greek authorities announced last week a temporary reduction of VAT for restaurants and catering. My understanding August 1 to December 31 is this temporary reduction. This announcement followed close consultation with the IMF, the ECB and the EC--the staffs. My understanding is staff did not object to the reduction because the authorities are taking measures to offset expected revenue losses. And they've also made the reduction temporary. So, that's the end of this year.

This also means that the reduction in that proceeds from restaurants and caterers will not affect our fiscal targets in 2013. So, I mean, that's where the VAT issue stands. In terms of how it happened, it did happen, so that's the bottom line.

QUESTIONER: I have another question on Greece. There are reports again today that IMF is leaving Greece, that IMF is withdrawing from Troika. The question is simple. Is it true?

MR. MURRAY: Well, our mission's been back in Washington to finish their business because we do have the board on Monday. I'm not aware of the IMF leaving Greece anytime soon. We have a strong and effective relationship with the ECB and the European Commission. That's where it stands.

QUESTIONER: I have two questions on different countries. Can you give us any updates on Egypt? Two weeks ago you said you had had no contacts with the authorities or with the transition government. Has this changed?

And the second question, are you making any progress in Ukraine? Is there an agreement in sight?

MR. MURRAY: Thanks for asking. We had some similar questions online so for those of you that submitted Ukraine and Egypt questions. On contacts in Egypt, no, we have not had any contact with the Egyptian government. There are technical level contacts with Central Bank and Finance Ministry technicians, but there has been no contact with the current government in Egypt.

On Ukraine, we had a mission to Kiev in April that conducted discussions with the authorities at a technical level on policies that could form part of a comprehensive Fund-supported program. But there have been no in-depth discussions of such a program at the policy level since April.

In the meantime, fund's staff is in the process of preparing for the Article IV Consultation—2013, Article IV Consultation. That mission is expected to happen sometime in the autumn. I don't have the precise date to offer on that. We think that the Article IV consultation will provide an opportunity for the fund's executive board to discuss the challenges that are facing Ukraine before the end of 2013. So, given the cycle on Ukrainian Article IV, I think they've been brought before the board roughly in the November timeframe. Don't hold me to that month and date, but that's sort of in the zone of when we might see something on that.

QUESTIONER: Can I just follow up on Egypt? Gerry, two weeks ago told us that what it takes for you to engage with the government depends on your shareholders. Is that still the case? There's no clarity from the shareholders?

MR. MURRAY: That's something I know you're watching. I mean it's a case of the international community not just the IMF, but the international community, its institutions, its nations coming together and recognizing a particular government. That would be true anywhere, and until our members make a decision on the Egyptian government, we're going to keep our contacts technical. It has to be at the technical level. It has to remain that way.

QUESTIONER: One question about Cyprus, can you give us an update on the mission? The mission is there. Do you know when they are coming back?

MR. MURRAY: Yes, you're correct. There is a mission on the ground. This is the first review of the extended fund facility with Cyprus. My expectations, just for the record, the mission should wrap up fairly soon. I don't have a precise date but it's getting close. The mission itself will have communication with the media and others in Nicosia. So, I expect you'll see something on Nicosia from the mission when it ends.

My understanding is the talks in Nicosia focus on the financial sector reform, macro-economic and fiscal performance, and the economic outlook, along with the status of other structural reforms that the Cypriot authorities have to undertake. You had a specific question. Really, because the team is on the ground, the financial sector reform is in there, but since the team is on the ground, we're not going to comment on the specifics of those discussions. I would stay tuned.

Let me just take another question online here:

“Following the recent public rift between coalition partners in the Portuguese government that ended in the shuffle, does the IMF see the executive as more or less stable? Could there be further delays in the start of the program review?”

We have active, ongoing relationships with the Portuguese government. I don't see this as necessarily germane, but we have no particular comments on the personnel moves, other than to reiterate that we look forward to continuing to work with the authorities to support Portugal's efforts to create the conditions for a sustained recovery and also sustainable growth and job creation. That's where that stands.

I have a question on South Sudan. We'll jump to Africa. I think we'll move off Europe for awhile. On South Sudan:

“How does the IMF view the recent firing of the vice president and ministers and non-passage of the petroleum act? What impact may this have?”

Thanks for that question. The effects on both countries, both South Sudan and Sudan, are likely to be quite severe, given the rundown of their reserve buffers since 2011, and a progressive build up of economic and social tensions. We can't give you a precise analysis of what these firings mean in terms of the severity of the economic dislocations in South Sudan and Sudan, but we basically hope that both countries will implement their recent agreements, given their importance for regional peace and economic stability. We also think that implementing these agreements will help relieve the economic pressures that have been building up since oil was shut down there in January of 2012.

QUESTIONER: Can you tell us when Mrs. Lagarde spoke recently with Secretary Lew of the United States, if they discussed Greece lately—the two of them. Because Mr. Lew was in Athens last Sunday, and there are reports that he discussed Greece with Madam Lagarde before he went there?

MR. MURRAY: I don't know. We'll get back to you on that. Don't forget the managing director and Secretary Lew were just in Moscow together at the G20 summit. I mean they cross paths quite often. They're here in Washington, but I'm not aware of any specific discussions between the secretary and the managing director on Greece. We'll get back to you and we'll share that.

One point I wanted to make regarding Argentina that I did forget to make is that, it doesn't matter what the countries are. We would do this no matter where we are if there's not the kind of support, we're going to have to take a decision to not proceed with the brief. That would have happened no matter what countries were involved. No matter where you are.

I think this is going to be my last question. This is a Hungary question:

“Are you leaving Hungary? European Commissioner Redding thinks that the Troika should be dissolved and that the EU can manage by itself. Please comment.”

On the latter half, there's been strong commentary quite the opposite from other EU commissioners. I mean Ollie Rehn and others have re-emphasized the important role that the Troika currently serves in European economic policy making, policy implementation. So, I think our views on that are pretty clear. We share those views widely.

On us leaving Hungary, I think this is in regards to ongoing movement to close our resident representative office in Budapest. Our plan is that the current Resident Representative posting expires next month, and that office will probably remain unfilled. Hungary is still a member of the IMF. We still have relations with Hungarian officials on a broad basis, and that really shouldn't change relations much.

All right, so a reminder, 10:30 a.m., Washington time, 3:30 p.m. GMT, that's the embargo.

QUESTIONER: Was there a mistake about the U.S. review coming out tomorrow?

MR. MURRAY: Oh, I'm glad you asked. No, that's not a mistake. The U.S. Article IV Consultation concluded yesterday at the Executive Board. Like I said, there's many, many Article IVs coming up. The U.S. Article IV Consultation was concluded at the Executive Board yesterday. Media relations will be in touch on precision of timing, but I do expect you'll see the full U.S. staff report. A lot of stuff in there. Okay? Thanks again, everybody. Have a good summer—August 15, next briefing.

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