Transcript of a Press Briefing with Gerry Rice, Director of the IMF Communications Department and IMF Spokesman
IMF News, September 1, 2016
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- Published: September 1, 2016
Global outlook and G-20 note (Helge Berger)
- Main messages
- Concern about low growth and low growth persisting for a long time.
- Current policies appear insufficient to change the low-growth trajectory.
- Combination of low growth and inequality increases policy challenges.
- Call for an ambitious growth strategy that lifts growth and makes it more widely shared.
- Short- and long-term drivers of weak growth
- Short-term: continued weakness in a number of countries (notably advanced economies); U.S. first-half growth much lower than expected leading to a planned downgrade of the U.S. outlook.
- Long-term: negative dynamics including weak investment ↔ slower trade ↔ lower productivity; high corporate debt and impaired bank balance sheets reduce investment incentives; aging populations and low productivity growth (especially in advanced economies).
- Political risks: concern that political climate and inward-looking policies could stall reforms and worsen growth.
- Policy strategy recommended
- Short-term support where demand is lacking, with fiscal policy playing a more prominent role where there is fiscal space (monetary policy stretched thin in many countries).
- Fast implementation of G-20 commitments on structural reforms and infrastructure investment; additional measures in many countries needed to meet the G-20 commitment to increase GDP in 2018 by 2 percent.
- Policies to ensure inclusive growth: skill building, fostering mobility, well-designed tax-benefit systems, and promotion of trade with attention to distributional outcomes.
- Forecast process and timing
- IMF preparing new forecasts for the October World Economic Outlook (WEO).
- For the U.S., given first two quarters’ developments, a downgrade of the outlook is expected.
- Global forecast adjustments remain contingent on mixed data across countries; formal updates planned in October.
Country-specific updates, missions, and operational matters
- Ukraine
- Existing IMF program approved last year in the amount of about 17.5 billion.
- Second review discussions are very close to being finalized; Board meeting expected to be announced shortly once technical timing issues are resolved.
- Staff welcomed contacts between Ukraine and Russia on Eurobond issue but is not party to those negotiations; Board will assess good-faith requirements under the Fund’s lending-into-arrears policy when it meets.
- Greece
- IMF will conduct a regular Article IV consultation with Greece in the second half of September.
- Last Article IV concluded in June 2013.
- Article IV mission typically lasts a couple of weeks; staff concluding statement expected at mission end.
- Article IV findings and data feed into sequencing of any IMF participation in programs and the DSA; timing will be sequenced with program discussions.
- IMF has implemented changes since the 2010 program and continues to incorporate lessons from the Independent Evaluation Office (IEO) assessment; IMF stance remains that future IMF participation requires both reforms and debt relief.
- On ELSTAT and allegations regarding Mr. Georgiou: IMF does not comment on individual legal proceedings; Mr. Georgiou is a former IMF staff member; IMF will engage Greek authorities to ascertain the accuracy of reported data.
- Egypt
- Staff-level agreement reached on August 11 for a program in the amount of $12 billion, pending IMF Board approval.
- IMF financing portion noted as $4 billion; Egyptian authorities seeking to mobilize five to six billion from others to complete the financing plan.
- Board date expected in the coming weeks.
- Mongolia
- Mission on the ground August 16 -19 met with newly elected government officials; discussions productive; IMF monitoring and stands ready to support.
- Mozambique
- One IMF staff member has been appointed Governor of the Central Bank of Mozambique; status regarding IMF resignation not specified in briefing.
- IMF staff team scheduled to be in Maputo on September 22 to review economic developments, the 2016 budget, monetary policy measures, and to take into account the fact-finding linked to previously undisclosed borrowing; visit expected to last about one week.
- Zimbabwe
- No financing program under discussion at this point.
- Authorities announced plans to clear arrears with the Fund and other institutions as part of reengagement; IMF financial support could only begin after arrears are cleared and the Board meets to approve normalization.
- Venezuela
- No change reported; no new contacts to announce.
Financial markets, Brexit, and commodities
- Brexit
- Financial markets have largely taken the UK vote in stride; much of the initial slowdown in affected sectors has been undone.
- IMF’s July update incorporated some short- and medium-term impacts of the UK vote; longer-term UK trajectory depends on exit terms and tradeoffs to be negotiated.
- Commodities and risk management
- IMF continues bilateral surveillance and country-level work on commodity shocks and related vulnerabilities.
- No specific new IMF policy product for the annual meetings was announced in this briefing.
Operational notes and timing
- Embargo and publications
- The G-20 note and a blog from the Managing Director were embargoed until 10:00 a.m. (Washington time) and scheduled for release that morning.
- SDR and RNB inclusion
- IMF noted that inclusion of the RNB in the SDR basket is on track; Gerry Rice subsequently noted October 1st is the date of inclusion of the RNB in the SDR basket.
- Personnel and travel
- Christine Lagarde and David Lipton to attend the G-20 Leader Summit in Hangzhou, with related travel to Laos for ASEAN and a visit to Canada the week of September 12 for meetings and lectures.
Key dates and numeric figures (as stated in the briefing)
- Embargo lift: 10:00 a.m. (Washington time).
- IMF program amounts and financing
- Ukraine program amount: about 17.5 billion.
- Egypt staff-level agreement: $12 billion.
- IMF financing portion for Egypt: $4 billion.
- Additional financing sought by Egyptian authorities: five to six billion.
- Missions and meetings
- Mongolia mission: August 16 -19.
- Mozambique IMF staff visit to Maputo: September 22 (expected to last about one week).
- Greece Article IV consultation: second half of September.
- Ukraine Board date: expected in the second half of September (targeted).
- Forecasts and shares
- U.S. share of global output noted as about 15 percent.
- G-20 commitment referenced to increase GDP in 2018 by 2 percent.
- SDR inclusion
- RNB inclusion in the SDR basket: October 1st (noted by MR. Rice following the briefing).
- Historical references
- Last Greece Article IV concluded: June 2013.
- First review of Ukraine program concluded: end of July, 2015.
- Staff-level agreement with Egypt reached: August 11.
Italicized attribution line provided by the pipeline.