Transcript of Press Conference by IMF Managing Director Christine Lagarde

IMF News, April 20, 2017

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Bibliographic details

• Published: April 20, 2017

Global outlook and forecasts

• Global growth forecasts from the WEO cited:
  • 2017 growth forecast: 3.5 percent
  • 2018 growth forecast: 3.6 percent
  • 2016 growth: 3.1 percent
• IMF view: global economy is "picking up momentum" but risks remain "tilted to the downside," including political uncertainty.
• Participation at the Spring Meetings: 189 representatives of the membership, Finance Ministers, Governors of Central Banks.

Policy priorities and recommended tools

• IMF’s three‑pronged approach to sustain growth:
  • Fiscal policy
  • Monetary policy
  • Structural reforms
• Priority objectives from the Global Policy Agenda:
  • Maintain growth momentum
  • Reinvigorate productivity (boosting innovation and trade)
  • Make growth more inclusive within countries, across countries, and between generations
• Specific policy actions recommended within countries:
  • Make tax and benefit systems more equitable
  • Boost high‑quality infrastructure investment
  • Mitigate structural change impacts (examples provided):
  • Minimum wages (raising them when too low)
  • Expanding in‑work tax credit (e.g., Earned Income Tax Credit)
  • Retraining, job search, labor‑market specific policies, relocation support
  • Revisiting housing policies to facilitate labor mobility
• Intergenerational policy focus:
  • Guard against excessive debt burden
  • Address unsustainable pension schemes
  • Maintain infrastructure and mitigate climate change impacts
• Cross‑country cooperation priorities:
  • Reduce excessive external imbalances
  • Clamp down on tax evasion and tax avoidance
  • Deliver the Sustainable Development Goals to support low‑income countries
  • Avoid "self‑inflicted wounds" such as restrictions, subsidies, and trade distortions

Productivity, innovation, and trade

• IMF emphasis: two clear forces that drive productivity up are innovation and trade.
• Trade status and concerns:
  • Trade is "picking up" and expected to continue increasing, but the environment is imperfect and "room to improve" exists.
  • Cited WTO‑related indicators:
  • Noncompliance with trade commitments by G20 countries rose from "a little over 2 percent" to 6.5 percent between 2015 and 2016
  • About 3,000 [new restrictive rules] since 2008
  • IMF supports cooperative, multilateral forums and dialogue to improve the trading system and preserve trade as an engine of growth.

Surveillance, External Sector Report, and currency monitoring

• Surveillance is one of IMF’s three missions (with lending and capacity development).
• External Sector Report (ESR):
  • Upcoming release: next July (the ESR will assess the external position of 29 countries)
  • ESR informs bilateral Article IV surveillance for those 29 countries
• Currency monitoring:
  • The ESR and EBA are evolving, sophisticated instruments that require continual improvement and judgmental inputs.
  • IMF does not consider it its mission to declare whether a country "is or is not a market economy."

Country‑specific assessments and recommendations

• China
  • Observations:
  • Positive recent economic performance partly due to stimulus
  • Rebalancing from investment toward consumption and services
  • Rebound in export activity as global demand picks up
  • IMF recommendations:
  • Specific recommendations on credit growth control, and reining in the housing sector (growth in housing continues despite efforts)

• United States / Trump Administration
  • IMF stance:
  • Seeks cooperation and dialogue with the Administration
  • IMF is not a trade organization but is concerned with trade as a growth engine
  • Emphasis on level playing field, no distortive or protectionist measures

• CEMAC (Central African Economic and Monetary Community)
  • Facts:
  • CEMAC comprises six countries
  • Two of the six are in IMF programs: Central African Republic and Chad
  • Recommendations:
  • Policies and reforms in the monetary area should be consistent and collective across the six countries
  • International support needed from IMF, African Development Bank, World Bank, and bilateral partners to address the double challenge of falling commodity prices and security issues

• Egypt
  • IMF assessment:
  • Egyptian program described as "very courageous" with major reforms underway
  • Critical issue highlighted: inflation needs to be addressed head‑on
  • Program context:
  • The program is "the second largest financial program that we have at the moment"
  • Importance of public endorsement of reforms for program success
  • Question referenced: timing/details for second tranche of the $12 billion (not answered with a date in transcript)

• India
  • IMF adjustments and observations:
  • Growth projection for 2017: 7.2 percent
  • Demonitization caused a slight downward revision; note that demonetization had been "remedied at about 75 percent" (latest March figure cited)
  • Positive view of GST implementation as a courageous reform that will substitute state taxes with a federal tax and require a digital platform
  • Supportive view of new Bankruptcy Law as important for corporate and banking sector reform

• Brazil
  • Status and outlook:
  • Brazil has come out of a major contraction in 2016; IMF forecasts show no negative forecasts for 2017 in the set discussed
  • Policy assessment: welcome fiscal policy stance (intention to reduce debt) and monetary policy response to reduced inflation
  • Structural reforms and addressing corruption cases are key to unlocking potential; transition time may be needed

• Germany and global imbalances
  • IMF view:
  • Germany's external imbalance within the Eurozone should be addressed
  • Part of Germany’s surplus is justifiable (aging population), but not all; reduction of the current account surplus, particularly the trade balance, is desirable
  • Positive notes: Germany increasing investment in child care centers, refugee integration, infrastructure; recommended investment in broadband

• Greece
  • IMF precondition for program involvement:
  • Program must "walk on two legs": sustainable reforms and debt sustainability
  • Status:
  • Progress on reforms (tax reform, pension reform) but details need to be finalized
  • Debt Sustainability Analysis depends on a "reasonable" primary surplus objective to determine the amount of debt restructuring needed

• Tax transparency and Panama Papers follow‑up
  • IMF observations:
  • Post-Panama/Bahamas Papers, multiple jurisdictions have undertaken tax pursuits, investigations, and controls to recover lost revenue
  • IMF supports BEPS, automatic exchange of information, and an international tax platform established with Bank, UN, and OECD
  • IMF provides about one third of its total capacity development on these tax issues, with a focus on helping low‑income countries raise domestic revenue

• Mexico
  • IMF assessment:
  • Commends solid policies from monetary authorities and Secretary of Treasury
  • Noted higher oil prices and related inflation; the monetary tightening response was appropriate
  • Mexico continues to satisfy the requirements of the Flexible Credit Line; IMF sees no reason to challenge that status

• Indonesia and inequality
  • Growth forecasts cited:
  • Current forecast: 5.1 percent
  • Next year forecast: 5.3 percent
  • Policy recommendations to address inequality:
  • Strengthen fiscal policy and revenue collection (example: Indonesia’s tax amnesty to repatriate revenues)
  • Continue structural reforms with vigor to create fiscal space for redistribution and inclusion

Key statistics and figures cited

• Global growth: 3.5 percent (2017), 3.6 percent (2018), 3.1 percent (2016)
• WEO forecasts and commentary referenced (Maury Obstfeld)
• India growth forecast: 7.2 percent (2017)
• Demonitization remediation: "about 75 percent" (latest March figure)
• ESR coverage: 29 countries
• CEMAC: six countries; two in IMF programs (Central African Republic and Chad)
• Panama/WTO/trade metrics:
  • Noncompliance by G20: from "a little over 2 percent" to 6.5 percent between 2015 and 2016
  • About 3,000 [new restrictive rules] since 2008
• IMF capacity development: about a third of total on international tax platform work
• Mexico: reference to $12 billion loan (question about second tranche)
• Indonesia growth forecasts: 5.1 percent, 5.3 percent

Transcript of Press Conference by IMF Managing Director Christine Lagarde, April 20, 2017 — IMF Communications Department

References

• People's Republic of China and the IMF
• Arab Republic of Egypt and the IMF
• Brazil and the IMF
• Germany and the IMF
• Greece and the IMF
• Indonesia and the IMF
• Mexico and the IMF
• IMF Surveillance -- A Factsheet
• Transcripts
• PRESS CENTER
• If you look at the recent report that was published,
• https://www.imf.org/en/home