Transcript of a Press Briefing by Gerry Rice, Director, External Relations, International Monetary Fund
IMF News, November 1, 2012
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- Published: November 1, 2012
Announcements and schedule
- Briefing date and location: November 1, 2012 — Washington, D.C.; briefing embargoed until 10:30 a.m.
- Upcoming engagements:
- Managing Director Christine Lagarde and First Deputy Managing Director David Lipton: G-20 meeting of finance ministers and central bank governors in Mexico City on November 4 and 5.
- Managing Director Lagarde: visits to Malaysia, the Philippines and Cambodia between November 14 and 20; attendance in Phnom Penh at the ASEAN Global Dialogue and the East Asia Summit.
- First Deputy Managing Director David Lipton: London later this month, including a speech at the London School of Economics focused on transformation in the Middle East.
- Jacques Polak Research Conference: November 8 and 9 at the Fund; theme “Labor Markets through the Lens of the Great Recession”.
- Regional Economic Outlook for the Middle East, North Africa and Central Asia launch: Dubai on November 11.
Greece — negotiations, program review, and debt sustainability
- Status:
- “Most policy issues between Greece and the European Commission, the European Central Bank and the IMF are being settled and staff level agreement on economic policies could come soon.”
- Completion of the first review under the Extended Fund Facility (EFF) requires understandings between Greece and its creditors on financing terms consistent with debt sustainability.
- Four components under discussion:
- Fiscal reforms.
- Structural reforms (good progress appears to be made).
- Financing issues.
- Financing consistent with debt sustainability.
- Financing specifics:
- IMF will not disclose numbers under discussion.
- Financing must be consistent with debt sustainability.
- The IMF is precluded by its mandate from reducing the interest rates on its loans.
- The existing Extended Fund Facility for Greece is “already at an extremely low interest rate and it's at the lowest that the IMF at the moment is capable of giving.”
- Debt-reduction options:
- “There are many options to help reduce Greece's debt burden and they should be considered.”
- Bond buy-backs “could be useful if they were implemented in such a way to deliver a meaningful reduction.”
- Critical requirement: Greece's debt burden must be sustainable for program credibility.
- Process and timeline:
- IMF staff completes its report and submits to the Executive Board; publication and review follow staff-level agreement on the review and financing package.
- No timeline provided; issues are “very complicated, difficult” and expeditious resolution is desired.
Lagarde List and tax compliance in Greece
- Core issue: equitable sharing of tax burden during adjustment; emphasis that “the better off, the well off, in Greek society pay their fair share.”
- On the specific “Lagarde List” episode: it relates to a period before the current Managing Director’s tenure; IMF refers inquiries to the French finance ministry.
G-20 message and IMF agenda in Mexico City
- Expected messages:
- Reiteration of the Tokyo Annual Meetings’ concerns on the global economy and uncertainty weighing on growth and the need for policy action.
- Further discussion of global outlook, financial regulation, and the Global Financial Safety Net.
- Follow-up on strengthening IMF surveillance, the integrated surveillance decision, the external sector report, and the global policy agenda discussed in Tokyo and the IMFC.
- IMF firepower:
- Tokyo outcomes increased IMF firepower from $456 billion to $461 billion.
- Tokyo also included pledges to strengthen the Poverty Reduction and Growth Trust to put IMF financing for low-income countries on a sustainable footing.
Egypt — loan discussions and IMF engagement
- IMF technical mission began negotiations with Egyptian authorities in Cairo this week on an economic reform program.
- Details withheld while mission is in the field.
- IMF stance: “The Fund stands ready to support Egypt and looks forward to working closely with the authorities on a program that addresses the country's economic challenges in a way that protects the vulnerable sectors of society.”
Spain and Italy — banking, reforms, and possible assistance
- Spain:
- Decision whether to request further assistance is for the Spanish government to decide.
- IMF completed the first monitoring mission of the banking sector; main finding: “important progress has been made in reforming the financial sector in Spain” and “it’s important to maintain that momentum.”
- IMF supports Spain’s reforms and emphasizes implementation as key.
- Italy:
- Measures announced by the Italian government are “headed in the right direction” to overcome difficulties, restore growth and bring back employment; implementation is key.
- IMF participation in any European assistance:
- IMF involvement requires a formal request; participation modalities would be worked out at the appropriate time.
- IMF “stands ready to support within our frameworks and again contingent on country requests.”
Hungary — program negotiations and prerequisites for resumption
- No mission currently planned; no date for resumption of talks.
- Meaningful progress requires:
- Clear indication from Hungarian authorities that they see the IMF and the E.C. as valuable partners.
- Clear commitment to policies that ensure balanced fiscal adjustment and promote growth.
- IMF has worked jointly with the E.U. in Hungary, including a joint E.U.-IMF mission in July; IMF maintains independent analysis and advice.
Ukraine — engagement and program modality
- Authorities have expressed interest in resuming a program relationship with the Fund.
- Specific modalities and conditions have not yet been discussed.
- IMF engagement awaits the new government following the recent election.
Cyprus — status of talks and follow-up mission
- IMF and the European Commission received counterproposals from Cypriot authorities on several policy issues; these are under analysis and discussion with Cypriot authorities and European partners.
- A follow-up mission to Cyprus is expected soon; dates have not been set.
Mexico — Flexible Credit Line (FCL)
- IMF has taken note of recent Mexican statements regarding renewal of the FCL.
- Any renewal would be considered by the IMF’s Executive Board should a formal request be made.
Portugal — recent review
- IMF completed the fifth review of Portugal last week; further details and Q&A are available in the press release and conference call transcript referenced by the Fund.
Transcript of a Press Briefing by Gerry Rice, Director, External Relations, International Monetary Fund — November 1, 2012