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

_IMF News, September 17, 2015_

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## Bibliographic details
- Published: September 17, 2015

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### Announcements and upcoming IMF events
- Press briefing date and location: September 17, 2015, Washington, DC.
- Embargo: briefing embargoed until 10:30 a.m. Washington time.
- Upcoming public events and remarks:
  - Monday, September 21: Managing Director Christine Lagarde to give remarks at a panel on the Role of Ethics in Finance (open event; Webcast).
  - September 22 at 11:00: Managing Director at the Brookings Institution for discussion on IMF’s role related to the United Nations’ Sustainable Development Summit.
  - September 25: Managing Director at the United Nations’ Sustainable Development Summit in New York City.
  - September 30: Managing Director to give IMF “curtain-raiser” speech for the Annual Meetings in Peru (hosted by the Council of the Americas; venue: the Willard Hotel).
  - September 23: Deputy Managing Director Min Zhu participating in a panel on Inequality and Fiscal Policy at the Center for Global Development.
  - September 28 at 9:00: WEO analytical chapters release.
  - September 29 at 9:30: GFSR analytical chapters release.

### Peru: “Peru: Staying the Course of Economic Success” (book launch)
- Book title: Peru: Staying the Course of Economic Success.
- Purposes of the book:
  - Document Peru’s economic successes.
  - Examine the reforms that enabled those successes.
  - Discuss the policy agenda to address future challenges.
- Key historical summary:
  - 1980s: Latin America’s “lost decade”; for Peru GDP was lower at the end of the 1980s than at the beginning.
  - 1990: Peru experienced hyperinflation, had run out of international reserves, and had suspended payments on its debt.
  - Post-1990: Peru implemented stabilization programs, macrofinancial reforms, a modern rules-based fiscal framework, inflation targeting, and constitutional/political/institutional reforms over two decades with IMF-supported programs.
- Recent performance and drivers:
  - For the last decade Peru has been the fastest growing country in South America, “growth of more than 6 percent on average a year.”
  - Strong policy framework and ample financial buffers helped Peru weather the global financial crisis with relatively little damage.
  - Commodity price boom contributed, but the book emphasizes the importance of the economic framework in enabling resilience.
- Forward-looking challenges and policy priorities:
  - External headwinds: end of the commodity super cycle, slowdown in China, normalization of U.S. monetary policy.
  - Need to replace lost commodity revenues and find new growth drivers.
  - Develop financial markets to withstand capital market volatility.
  - Continue challenging institutional reform agenda.
- Publication note:
  - A shorter excerpt summary will be made available for free on the IMF Website.

### Greece: elections and IMF engagement
- Context:
  - Greek national election imminent (three days away at time of briefing).
  - IMF will respect the democratic process and work with whichever government emerges.
- IMF position on program participation and timing:
  - IMF has linked its participation in an EU program to credible policy reforms and credible, adequate financing including debt relief.
  - No precise timeline given for IMF decision on joining a program; prior timelines mentioned “by the end of the year” have been discussed historically but no new commitment provided.
  - IMF will await political outcome and decisions by the Greek government before specifying next steps.

### Russia and Ukraine
- Russia — fiscal and monetary policy comments:
  - IMF staff agrees with the Russian Minister of Finance’s proposed use of a benchmark oil price for the 2016 draft budget expenditures that is lower than that allowed by the fiscal rule; this should preserve fiscal consolidation and anchor expectations.
  - Monetary policy: IMF staff believe monetary policy normalization in Russia should be conditioned on decline of actual inflation and inflation expectations; staff agreed with the recent pause in the easing cycle to assess inflation impact from exchange rate moves.
- Ukraine — sovereign debt restructuring and Russian bond:
  - Ukrainian parliament approved a debt restructuring agreement, enabling a planned bond exchange offer.
  - IMF view: full implementation of the agreement will provide targeted external debt service relief, reduce post-program gross financing needs, and place public debt on a clearly downward path; broad support from euro bond holders is important.
  - Status of the $3 billion Russian loan/bond:
    - Ukraine made the latest payment on that bond in June; no arrears exist.
    - Next payment not due until December.
    - IMF Executive Board is responsible for establishing the bond’s status and “has not made a decision on this.”
- Allegations of diversion of IMF funds in Ukraine:
  - IMF statement: the allegations referred to in media reports are “unfounded.”
  - IMF funds are disbursed with safeguards to support balance of payments and strengthen reserves.

### U.S. Federal Reserve decision and spillovers
- IMF respect for the Fed’s independence and decision-making process; no policy prescription given.
- General IMF advice to other economies:
  - Be vigilant about spillovers; responses are case-by-case.
  - Emphasize policy coordination, clear communication, and appropriate policy responses.

### Official reserves transparency (COFER)
- IMF supports “as much transparency as possible.”
- Recent advisory/publication on official reserves and the COFER program is part of that transparency drive.

### IMF quota and governance reform (2010 reforms)
- Effective implementation of the 2010 quota and governance reform is IMF’s highest priority for credibility, effectiveness, and resource sufficiency.
- Urging countries that have not ratified the 2010 reforms—“in particular the United States”—to do so as soon as possible.
- Timeline and Executive Board action:
  - Executive Board adopted a report on June 11 noting more time needed to build consensus.
  - The report states if 2010 reforms were not ratified by September 15, the Executive Board would consider, prior to the end of September, which interim solution to pursue and complete work on steps representing meaningful progress toward objectives “as early as possible and no later than mid-December 2015.”
  - Anticipated Executive Board meeting in late September to discuss possible interim steps; no specific date provided.
- Number of non-ratifying countries: described as “very few”; IMF to provide a list on request.

### China: data quality and reform stance
- IMF assessment:
  - China is transitioning to a safer, more sustainable growth model with reforms to make the economy more market oriented and globally integrated.
  - China has made great progress modernizing GDP statistics; methodologies are largely in line with international practice.
  - “Like many countries however there is room for improvement” and it is important China continue to improve data quality to reflect rapid structural change.
- IMF engagement on SDR review and China:
  - IMF is working closely with Chinese authorities on the SDR review process to assess criteria for possible inclusion of the renminbi in the SDR basket and to ensure operational needs of SDR users are met.

### Refugee crisis: IMF role and economic implications
- Humanitarian priority emphasized.
- Managing the crisis will require collective concerted action.
- Fiscal impact: too early to produce specific estimates; effects are case-by-case.
- Experience suggests pace of labor market integration is crucial to economic outcomes.
- IMF involvement:
  - Engaged in dialogue and program support where appropriate.
  - Works to help countries create fiscal space to accommodate refugee needs (example: Jordan).

### Country-specific program notes
- Ghana:
  - Question on legality of IMF arrangements and parliamentary approval.
  - IMF stance: whether IMF arrangements require parliamentary approval is a matter of domestic law and for member authorities to decide.
  - Ghana authorities issued a press release on September 10 confirming that under Ghanaian law no such parliamentary approval is required.
- Pakistan:
  - IMF supporting Pakistan program; eighth review concluded in August; IMF Board scheduled for September 28.
  - Completion of the review would make “about 502 million” available to Pakistan.
  - Monetary policy: easing made possible by improving stability and low inflation; a moderate pick-up in inflation expected as international energy prices stabilize; real interest rates remain positive and inflation expectations expected to stay well anchored.
  - Exchange rate: pronounced real appreciation of the rupee over two years hurt exports; recent depreciation against the U.S. dollar is “a welcome development.”
- Brazil:
  - IMF does not comment on rating agency actions.
  - Focus is on underlying trends: economic growth and public finances pushing debt ratios up.
  - Recently announced proposed measures by Brazilian authorities are “a positive step toward restoring fiscal sustainability”; implementation and Congressional approval where required are important.
- Italy:
  - No sufficient information to opine on specific 2016 budget details.
  - General guidance: fiscal policy must support nascent recovery and reduce very high public debt.
  - Growth-friendly measures: tax cuts on labor and capital financed by expenditure cuts identified by spending review; modest use of SGP flexibility could support structural reform agenda; acceleration in privatization could help reduce debt.

### SDR review process
- IMF Board scheduled to formally discuss the SDR review toward the end of the year.
- IMF staff working closely with Chinese authorities on criteria assessment and operational readiness for possible inclusion of the renminbi in the SDR basket.
- Process described as “progressing,” “going well,” with “full engagement” and on schedule for later this year.

*Transcript of a Press Briefing by Gerry Rice, Director, Communications Department, IMF — September 17, 2015*

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## References

- [Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [Ghana and the IMF](http://www.imf.org/external/country/GHA/index.htm)
- [Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)
- [Italy and the IMF](http://www.imf.org/external/country/ITA/index.htm)
- [Pakistan and the IMF](http://www.imf.org/external/country/PAK/index.htm)
- [Peru and the IMF](http://www.imf.org/external/country/PER/index.htm)
- [Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)
- [Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [IMF Quotas -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2022/imf-quotas)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Transcripts](https://www.imf.org/en/news/searchnews)
- [Gerry Rice](https://www.imf.org/external/np/bio/eng/gr.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Webcast](https://www.imf.org/external/mmedia/view.aspx?vid=4491963480001)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr091715_