Transcript of International Monetary Fund Managing Director Christine Lagarde's Opening Press Conference, 2019 Spring Meetings
IMF News, April 11, 2019
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- Published: April 11, 2019
Global outlook and key projections
- IMF global growth forecast for 2019: 3.3 percent.
- IMF global growth forecast for 2020: 3.6 percent.
- Characterization of global cycle: shift from "synchronized growth" covering 75 percent of the global economy a year ago to "synchronized slowdown" covering 70 percent of the global economy.
- China growth forecasts cited: 6.3 percent in 2019 and 6.1 percent in 2020; recent Chinese stimulus measures are described as "welcomed" and "the right approach under the circumstances," while noting a continued shift "towards quality growth."
- Russia: slight downgrades for 2019 and 2020 relative to prior forecasts; cited growth rates around "1.6, 1.7 percent" as examples of modest growth that call for deeper structural reforms.
Downside risks and areas of fragility
- Downside risks listed: unresolved trade tensions; high debt in some sectors and countries (public and corporate); weaker‑than‑expected growth in stressed economies; consequences of Brexit.
- Brexit: the six‑month extension removed the immediate risk of a no‑deal Brexit on April 12; extension reduces short‑term risk but prolongs uncertainty.
- Venezuela: IMF expresses very high concern about the humanitarian crisis and refugee flows; IMF capacity to act is contingent on members' diplomatic recognition of an authority to represent Venezuela; IMF has done preparatory work to act "as quickly and as swiftly as we can" once guidance is received.
- Argentina: assessment that the program is beginning to work; economy "at a point where it is going to bottom out"; social protection is a key priority and continuity of program work is urged.
Policy recommendations — principles and priorities
- Two overarching principles recommended:
- "Do no harm" — avoid wrong policies, especially protectionist measures (tariffs and other barriers) and unfair/disortive trade practices.
- "Do the right thing" — country‑specific, multiple policy actions rather than one‑size‑fits‑all.
- Specific policy priorities:
- "Fix the roof": pursue outstanding structural reforms to boost potential output and support convergence for developing countries.
- "Create more room in order to resist the next crisis": enhance resilience by making smarter use of fiscal policy and strengthening financial sector policies and discipline.
- Tackle issues with high potential to boost revenue, growth, and inclusion: reform the international taxation system (in particular corporate taxation), strengthen competition frameworks, and "fight corruption at both ends, supply and demand."
- Strengthen international cooperation and multilateralism with a strong focus on people.
Fiscal, monetary, and financial policy guidance
- Fiscal policy: many countries are urged to rebuild fiscal buffers; countries in fiscal surplus should use space to invest; fiscal policy should be used together with other tools rather than relying solely on monetary policy.
- Monetary policy: central banks have provided accommodation and clearer communication (Fed, ECB, Bank of England cited); markets have taken comfort from central bank communications; IMF cautions limited remaining room in many advanced economies due to low interest rates and large central bank balance sheets.
- On reliance on monetary policy: IMF view is that "policies should use all the tools in the toolbox" and monetary authorities should "stay accommodating" while facilitating necessary fiscal measures.
Debt transparency, lending, and surveillance reforms
- IMF and World Bank working together to improve debt transparency: identify terms, conditions, volumes, and maturities; this work has been requested by the G20.
- Encouragement for borrowers and lenders to align with G20 debt principles; recognition that future restructurings will be more complicated due to multiplicity of lenders and nonpublic creditors.
- Surveillance reform objectives:
- Move toward "comprehensive surveillance" that harnesses institutional competencies (fiscal, market and monetary policy, capacity development) to deliver country services.
- Leverage knowledge management, data, and technologies for speedier delivery and more integrated Article IV work.
- Continue improvements to External Sector Report and methodologies for assessing currency and external positions.
Country‑level actions and program updates
- Mozambique: Government submitted a request for the Rapid Credit Facility to provide speedy access to concessional financing following cyclone Idai; IMF moving forward "prompt[ly]" pending Board approval.
- Zimbabwe: IMF staff announced agreement with the Zimbabwean government on a new Staff‑Monitored Program to address deep economic problems and serve as a stepping stone to greater stability.
- Egypt: Egypt has delivered under its Extended Fund Facility; program near completion with the next review expected to be completed satisfactorily; IMF noted ownership and large sacrifices made by the Egyptian people; emphasis on supporting entrepreneurship of young people.
- Tunisia: IMF mission recently returned; discussions ongoing with authorities on specific points (e.g., pricing) with finalization expected in coming days.
- Nigeria: IMF recommendation to remove fossil fuel subsidies grounded in a general principle; cited IMF/Fiscal Affairs Department estimate that "no less than about $5.2 trillion" were spent on fuel subsidies and related consequences in 2015; removal should be accompanied by social protection safety nets and improved revenue mobilization given Nigeria's low tax‑to‑GDP ratio.
- Russia: macro indicators (debt, current account surplus, fiscal surplus) characterized as "pretty healthy" though structural reforms needed to raise growth potential.
- Venezuela: IMF is persona non grata inside Venezuela and lacks field information; response and financial involvement depend on members' diplomatic guidance; IMF prepared to support a large, multi‑pronged response when authorized by membership.
- Argentina: program showing signs of working; expectation that economy will bottom out; candidates should not abandon program priorities, especially social protection.
Views on specific policy ideas and theories
- Trade: long‑term benefits of trade integration for productivity, innovation, growth, employment, and lower cost of living; need to address dislocations and unfair practices; support for WTO system reform.
- Fuel subsidies: removal recommended as a general principle to free resources for health, education, and infrastructure, subject to adequate social protection for vulnerable groups.
- Modern Monetary Theory (MMT): IMF view is that MMT is not a panacea; "very, very, very limited circumstances where it could work," such as liquidity traps or deflation, and even then with significant caveats and risks when interest rates eventually rise.
Transcript of International Monetary Fund Managing Director Christine Lagarde's Opening Press Conference, 2019 Spring Meetings