## Transcript of a Press Briefing with Gerry Rice, Director of the IMF Communications Department and IMF Spokesman

_IMF News, March 9, 2017_

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## Bibliographic details
- Published: March 9, 2017

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### Announcements and upcoming IMF outputs and events
- Press briefing embargo: until 10:30 a.m. Washington D.C. time (day of briefing).
- Upcoming IMF releases and appearances:
  - March 14: G20 Surveillance Note release accompanied by a blog by Christine Lagarde, Managing Director; sets stage for G20 Finance Ministers and Central Bank Governors meeting in Baden-Baden, Germany later that week.
  - March 14: Christine Lagarde participating as a member of the UN's high-level panel on women's economic empowerment in New York City.
  - March 16: Christine Lagarde participating in an IIF event in Frankfurt, Germany (discussion with Tim Adams, title: "the G20 agenda under the German presidency").
  - March 17 and 18: Christine Lagarde and David Lipton will participate in the G20 meeting in Baden-Baden.
  - March 18 and 20: China Development Forum in Beijing; Deputy Managing Director Tao Zhang to attend.
  - March 20: IMF Board meeting scheduled on Ukraine (confirmed during briefing).
  - Maury (Maurice) Obstfeld, Economic Counselor, to release a paper on labor and product market reforms in advanced economies; presentation at a conference in Berlin at the German Institute for Economic Research (paper title referenced: labor and product market reforms in advanced economies; fiscal costs, gains and support).
  - April: World Economic Outlook update (timing indicated for Brazil forecasts and others).
  - External Sector Report (ESR) update: referenced as upcoming in a few months' time / later this year.

### China: growth outlook and reform priorities
- Growth assessment:
  - IMF view: "China's current strong economic momentum is likely to make 6.5 percent growth for 2017 achievable."
  - Noted official target cited from questioner: "GDP gross target over 2017 at around 6.5 percent", contrasted with "tax range of 6.5 to 7 percent last year" (as quoted by questioner).
- Policy advice and reform priorities (as stated by Mr. Rice):
  - Advise less focus on high GDP growth targets per se; more focus on:
    - Tackling excessive credit growth.
    - Hardening budget constraints on state-owned enterprises.
    - Boosting the social security system.
  - Welcome China's commitment to multilateralism and international trade.
- Assessment of reform progress:
  - Progress described as "impressive" but "uneven" on rebalancing and reform.
  - Specific observations: more progress on switching from industry to services and on financial-market liberalization; less progress on tackling credit growth and hardening state-owned-enterprise budget constraints.
  - Consequence: "vulnerabilities are still rising and buffers are eroding"; calls for greater urgency in implementation.
- Capital flows:
  - Capital flows seen as a natural consequence of capital-account liberalization and global financial conditions.
  - Capital outflows become a concern only if they give rise to a "disorderly adjustment in the exchange rate and the economy more broadly"; IMF does not see that concern warranted "right now."
- External sector:
  - "The large current account surplus of a decade ago has been much reduced" — work on external sector continues.

### Trade, global imbalances, and the G20 surveillance agenda
- IMF stance on trade:
  - "Trade as an engine of growth for the U.S., and the global economy."
  - Trade deficits and surpluses are considered in the IMF’s multilateral-consistent assessment of external accounts (referenced vehicle: External Sector Report, ESR).
  - Trade is part of the growth equation but "not the only part"; IMF analysis is comprehensive.
  - Position: support for an open trade system conducted "under fair rules, well enforced."
- On global imbalances:
  - IMF monitors imbalances on an ongoing basis via Article IVs and the External Sector Report; no new specific judgment delivered at briefing beyond continued monitoring.
- G20 focus (IMF perspective heading into Baden-Baden):
  - Priority on maintaining growth momentum and making growth more inclusive.
  - Strengthening global integration and addressing international financial architecture, financial regulation, international taxation cited as likely topics.
  - Exchange rates expected to be a topic of discussion; no specific confirmation about "currency manipulation" on the agenda.
  - Africa flagged as an important part of the Germany G-20 presidency agenda.

### Ukraine: program status and IMF engagement
- IMF financial support history (as described):
  - IMF approved "a $17.5 billion facility for Ukraine in the recent period."
- Recent program progress:
  - IMF staff and Ukrainian authorities agreed on the third review of the program (announced the weekend prior to the briefing).
  - Board meeting on Ukraine scheduled for March 20 (confirmed).
- Program objective:
  - Assist Ukraine to meet severe challenges and restore "sustainable and inclusive growth, jobs."
- Governance and use of IMF funds:
  - IMF affirms stringent guidelines and safeguards on use of IMF funds; governance record described as very strong.

### Brazil: recession and fiscal reform priorities
- Economic context:
  - Q4 2016 data underlines challenging situation.
  - 2016 GDP contraction cited by questioner: "GDP 2016 decreased at 3.6 percent" (questioner remark).
  - IMF view: Brazilian economy expected to "come out of recession this year."
- Fiscal policy priorities:
  - Welcome emphasis on addressing unsustainable debt trajectory and acting on the spending side.
  - Noted policy action: passing of a Constitutional amendment on the federal spending cap described as "important progress."
  - Importance of enacting social security reform to bolster viability of the spending cap and ensure support for future generations.
  - Such measures expected to boost confidence and spur growth.
- Forecast and timing:
  - April World Economic Outlook will update growth forecasts for Brazil and other countries, incorporating Q4 2016 data.

### Greece: negotiations and IMF stance
- Discussion posture:
  - IMF mission is in the field and actively discussing with Greek authorities and European partners; Mr. Rice limited comments to avoid interfering with ongoing discussions.
- Public statements:
  - "There has been progress in some important areas and we welcome that. However, differences remain in important areas."
  - "It's still too early to speculate on when an agreement might be reached."
- Board-level discussions:
  - Mr. Rice: not aware of any board-level discussions on the specific level of a possible IMF contribution to Greece.

### Mozambique: sovereign debt and IMF engagement
- Situation summary:
  - Mozambique "faces a very challenging situation."
  - Mozambique defaulted in January on a bond coupon payment (January default referenced).
- IMF engagement:
  - IMF mission visited Mozambique and the Fund is "very much engaged" to assist.
  - IMF has emphasized the importance of an independent audit to account for previously undisclosed spending.
  - Discussions on a possible new IMF-supported program continue, contingent on audit and other factors.

### Cameroon and the CEMAC region
- Regional context:
  - CEMAC: six Central African Economic nations (Central African Economic and monetary community).
  - Heads-of-state meeting in Yaoundé on December 23 requested IMF assistance to design reforms after severe shocks including sharp decline in oil prices.
- IMF activity:
  - Missions already sent to Gabon and Republic of Congo; existing programs with Central African Republic and Chad.
  - IMF mission sent to Cameroon; press statement issued (reference to Corrine Deléchat press statement).
- Security and economic risk:
  - IMF aware of events in the Anglophone regions (Northwest and Southwest Cameroon).
  - Macroeconomic impacts from such events typically felt with a lag; events starting in November likely had limited impact on 2016 production.
  - Risks to 2017 growth outlook include continuation of sociopolitical events in northwest and southwest regions.
  - Medium-term outlook described as "positive, subject to the implementation of appropriate policies."

### Jordan: fiscal measures and social protection
- Clarification of IMF role:
  - IMF does not impose programs; partners with members on program design and support.
- Jordan’s situation:
  - Jordan faced difficult conditions due to external shocks.
  - IMF supports government reform program aimed at inclusive growth while sustaining macroeconomic stability and advancing structural reforms to promote investment and employment.
- Revenue and social protection:
  - Program emphasized broadening the tax base to curb rising public debt while alleviating impacts on the most vulnerable.
  - IMF has not recommended specific products for higher taxes and has emphasized not raising prices of goods consumed by the poor.
  - Social protection is an important element of the government’s reform program.
  - Support for the government's November decision to increase food subsidies using budgetary savings from other measures; transitioning to a better-targeted subsidy system noted.

### ECB monetary policy reaction
- ECB decision that morning:
  - ECB kept interest rates and nonstandard monetary policy measures unchanged.
  - IMF view: ECB’s accommodative stance is improving credit conditions, supporting output recovery and a gradual rise in inflation.
  - IMF reassured by ECB’s commitment to use all instruments within its mandate to ensure sustained adjustment in inflation path consistent with medium-term price stability objective.

### Egypt: IMF program implementation and subsidies
- Program status:
  - IMF program with Egypt described as "going well."
  - IMF team meeting with Egyptian authorities to prepare for the first review mission in April; formal assessment to occur in coming months.
- Subsidies and social protection:
  - "There is no plan to reduce food subsidies in the authorities’ programs supported by IMF’s EFF arrangement."
  - IMF supports social protection; supports decision to increase food subsidies in November funded by budgetary savings and supports transition to better-targeted subsidies.

### Closing and process remarks
- Mr. Rice reiterated IMF positions:
  - Continued monitoring of imbalances and exchange rate issues via Article IVs and the External Sector Report.
  - Preference to allow in-field missions and negotiations (e.g., Greece) to proceed without public interference.
  - Commitment to partner with member countries, ensure IMF safeguards and governance of IMF resources.
- Practical notes:
  - Next substantive IMF public outputs referenced: G20 Surveillance Note (March 14), World Economic Outlook (April), External Sector Report (later in the year).
  - Mr. Rice concluded with plans to re-engage in a couple of weeks and good wishes for G20 attendees.

*Transcript of a Press Briefing with Gerry Rice, Washington, D.C., March 9, 2017 — IMF Communications Department.*

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## References

- [Gerry Rice](http://www.imf.org/external/np/bio/eng/gr.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/03/09/tr030917-transcript-of-a-press-briefing-with-gerry-rice_