Transcript Of IMF Press Briefing Thursday, February 23, 2017

IMF News, February 23, 2017

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• Published: February 23, 2017

Announcements and logistics

• Briefing embargoed until 10:30 a.m., Washington, D.C. time.
• Managing Director Christine Lagarde: was in Berlin (met Chancellor Merkel); today in Vienna.
• Deputy Managing Director Mitsuhiro Furusawa: will be in Bangladesh, Malaysia, Singapore, and Japan; will speak at a joint seminar in Tokyo and Hitotsubashi University on March 8th.
• IMF blog highlights:
  • "The Issue of Inequality" by Jonathan Ostry and Prakash Loungani (issued yesterday).
  • Upcoming blog "Dealing with Sovereign Debt: The IMF Perspective" co-authored by Sean Hagan, Maury Obstfeld, and Poul Thomsen (to be published later today).
• Spring Meetings: pre-registration open.

Greece — program status, "two-leg" approach, and mission timing

• IMF position: unchanged "two-leg" approach — reforms (policies) and debt relief are both required for IMF participation in a financing arrangement.
• Requirements for IMF participation:
  • An upfront, credible commitment to specific debt relief measures is needed (implementation can be staged later).
  • Agreement on strong policies to credibly attain fiscal targets and return to sustainable growth.
  • Both discussions (policies and debt relief) and credible commitments on both must occur before IMF staff can recommend participation to the IMF Executive Board.
• Recent developments:
  • After the Eurogroup meeting (Monday), IMF welcomed progress by Greek authorities and agreed to send the mission back to Athens.
  • Managing Director Lagarde met Chancellor Merkel (Berlin) and reiterated IMF willingness to support the ESM program with a financing arrangement once agreement is reached on a credible package of policies and debt relief.
  • Prime Minister Tsipras and Managing Director Lagarde have been in contact recently about resuming negotiations.
• Mission timing:
  • Mission is returning to Athens early next week (after the briefing).
• Media reports and rumors:
  • Reports that the Fund was considering a new loan to Greece of about $5 billion are not confirmed by the IMF; such reports are not correct.
• On possible delay risks:
  • IMF acknowledges that delays can matter but notes progress and the resumption of mission discussions; stresses need to let discussions play out with urgency to serve Greece’s interests.

Greece — questions on eurozone membership analysis

• IMF response on analysis of Greece exiting the euro:
  • IMF asserts a voluminous body of analysis on Greece over the last seven years (staff reports, ex post evaluations) that inform its view of Greece’s best economic interests.
  • IMF notes Greece’s explicit objective to retain eurozone membership, which is taken into account in IMF engagement and support.
  • IMF did not provide a single standalone public analysis debating pros and cons of euro exit at this briefing, but indicated existing material can be pointed to afterwards.

Ukraine — program review status

• Progress: "good progress" on policies needed to complete the third review under the program; close discussions with authorities are continuing.
• Timeline: if remaining issues are resolved soon, IMF expects to propose completion of the review to the Board "in the coming weeks."
• Remaining issues (general areas): pensions, governance, corruption — discussions ongoing.
• IMF contacts in Ukraine: Finance Ministry, Office of the Prime Minister, National Bank (all key interlocutors).

China — renminbi (RMB) assessment and External Sector Report (ESR)

• Most recent IMF view: in the latest ESR and Article IV consultation with China (last summer), China’s currency was assessed as "broadly in line with fundamentals."
• Future assessment: an updated assessment of China’s exchange rate will be forthcoming in the summer of this year as part of the next ESR and Article IV consultation with China.
• Broader context:
  • IMF has been encouraging China’s transformation and rebalancing for many years.
  • The large current account surplus of a decade ago has been much reduced.
  • Remaining reform needs include external trading and capital flow reforms; capital flows "remain some distance from a sustainable balance."
• On "currency manipulator" characterization: IMF will rely on its ESR and Article IV processes; will publish updated, multilateral-consistent assessments in due course.

U.S. Treasury relations and expectations for frank assessments

• Managing Director Lagarde had a wide-ranging telephone conversation with U.S. Treasury Secretary Mnuchin; both sides described the discussion as constructive.
• IMF stance: committed to providing frank, candid, multilateral-consistent assessments of members’ external sectors (Article IV and ESR) and intends to continue doing so.
• Relationship outlook: IMF expects continued strong, productive relationship with the United States, a major shareholder.

Brazil — economic outlook

• Recent conditions:
  • Brazil is coming out of its longest recorded recession.
  • GDP continued to contract in the third quarter of 2016.
  • Activity indicators point to a delayed recovery as private spending remains weak.
• IMF forecast:
  • January WEO update forecasts real GDP will return to positive growth in 2017.
  • Elevated unemployment and high private sector debt will continue to drag on demand.
  • IMF will update forecasts in the April World Economic Outlook, incorporating Q4 2016 data and factors such as an expected bumper crop in 2017.

Humanitarian crises and UN appeal

• IMF reaction: noted developments with concern and will stay in contact with authorities to discuss how IMF can be supportive.
• Example cited: ongoing conflict in places like South Sudan with severe impacts on livelihoods; outbreak of famine would exacerbate conditions.

Nigeria — IMF program stance and Article IV timing

• Nigerian authorities have stated they will not apply for an IMF program; IMF has no program discussions or negotiations underway with Nigeria.
• IMF engagement: concluded 2017 Article IV consultation; IMF Board discussion scheduled for later in March.
• IMF offers technical assistance and productive dialogue and stands ready to help if Nigeria requests financial assistance.
• IMF view on policy urgency: a coherent and credible package of monetary, fiscal, and structural policies is needed urgently; the window for bold reforms is closing as the 2019 elections approach.

Forecasts and publication timing

• No IMF projections or forecasts expected to be updated before the Spring Meetings (no information suggesting earlier publication).
• April World Economic Outlook will update forecasts (explicitly noted for Brazil).

Media reports clarification

• Reports in the German press suggesting Managing Director Lagarde agreed to provide 5 billion euros as part of IMF participation in a Greek program are not correct.

Transcript Of IMF Press Briefing Thursday, February 23, 2017 — IMF Communications Department

References

• People's Republic of China and the IMF
• Brazil and the IMF
• Greece and the IMF
• Nigeria and the IMF
• Ukraine and the IMF
• United States and the IMF
• IMF Policy Advice -- A Factsheet
• Proposals for a Sovereign Debt Restructuring Mechanism (SDRM) -- A Factsheet
• Transcripts
• PRESS CENTER
• https://www.imf.org/en/home