Transcript of IMF Press Briefing
IMF News, September 12, 2019
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- Published: September 12, 2019
IMF leadership, calendar, and public engagements
- Christine Lagarde's official resignation from the IMF takes effect on September 12, 2019.
- Kristalina Georgieva, Chief Executive Officer of the World Bank, confirmed willingness to be considered as a candidate for IMF Managing Director.
- Executive Board process timeline:
- Board to meet with Kristalina Georgieva starting September 24.
- Process expected to be completed by October 4, at the latest.
- Acting Managing Director David Lipton engagements:
- Representing the IMF at the UN General Assembly in New York, September 24 to 26.
- Participating in high-visibility events including the high level dialogue on financing for development and the Bloomberg Global Business Forum Roundtable.
- Annual Meetings:
- October 14 to 20 (Washington).
- World Economic Outlook press briefing scheduled for Tuesday, October 15.
Argentina — program status, risks, and upcoming discussions
- Upcoming engagement:
- Minister Hernan Lacunza and his team expected to visit Washington in late September for continuation of discussions.
- This visit will be an opportunity to take stock of the program and discuss crisis response measures and the overall macroeconomic framework.
- Disbursement questions:
- Reference to pending disbursement amounts: "5.4 billion" and a following one of "one billion" (as cited in press question).
- Discussions about these disbursements are part of the late-September visit.
- IMF assessment and contextual summary:
- IMF role described as lender of last resort, assisting to smooth adjustment, protect the broader economy, and protect the most vulnerable.
- Background: authorities approached the Fund last summer after a destabilizing economic shock triggered by a severe drought and difficult financial conditions, including significant currency volatility.
- With IMF support, authorities reduced the current account and the fiscal deficit.
- Remaining challenges: stubbornly high inflation, pickup in poverty rates, subdued economic activity, and important downside risks (including policy discontinuity and political uncertainty).
- Recent developments:
- Since mid-August, Argentina experienced a renewed confidence shock that severely affected macroeconomic stability.
- Authorities announced measures to safeguard reserves, stabilize the exchange rate, and protect deposits.
- On criticisms and rules:
- IMF stance: allegations that the IMF broke rules were definitively rejected in the briefing; IMF objective has been to help stabilize the situation and pave the way for growth.
- The staff reports documented risks and noted that risks of the program could be potentially exacerbated by adverse market reactions and political uncertainties.
- Engagement with opposition:
- IMF previously engaged in Buenos Aires with Mr. Alberto Fernandez and his economic team; future engagements will be decided after late-September meetings with the minister.
Global economy and trade outlook
- Pace of global economic activity described as subdued, precarious, fragile, and delicate.
- Manufacturing weakness noted: weakening in manufacturing activity to levels not seen since the global financial crisis.
- Trade tensions:
- Rising trade and geopolitical tensions increase uncertainty and are taking a toll on business confidence, investment, and global trade.
- IMF latest estimate on U.S.–China tariffs (including those implemented and announced): could potentially reduce the level of global GDP by "0.8 percent" in 2020 with additional losses in future years.
- Clarification: the "0.8 percent" estimate covers tariffs "implemented and announced."
- Recession outlook:
- Recession is "not in our baseline" at present.
- IMF will publish updated forecasts and analysis in the World Economic Outlook in October.
Zimbabwe — staff-monitored program and prerequisites for IMF financing
- Current engagement:
- IMF has a Staff-Monitored Program (SMP) with Zimbabwe; IMF staff in Harare from "September 5" and expected to be there until around the "17th" for the first review of the SMP.
- Policy advice and reform priorities advised to the Government:
- Restore macro and financial stability (likely requiring fiscal adjustment).
- Adopt reforms to allow effective functioning of market-based foreign exchange and debt markets.
- Implement structural reforms, including reform and privatization of state-owned enterprises.
- Enhance governance, including in procurement and revenue administration.
- Improve the business environment.
- Design safeguards to protect the most vulnerable.
- Preconditions for IMF financing:
- Zimbabwe is in good standing with the IMF and has cleared arrears with the IMF.
- For IMF financing to be forthcoming, Zimbabwe would need to clear arrears to other international financial institutions.
- Financing assurances would be needed from other official bilateral creditors.
- Agreement on a coherent set of economic policies to restore macro stability and lay a foundation for growth.
Ukraine — program status and ongoing missions
- Standby arrangement details:
- Board approved a standby arrangement for Ukraine of "about 4 billion", "3.9 billion", and "about 1.4 billion of that has already been disbursed" (statement as given).
- Current engagement:
- IMF mission currently in Kiev for Article IV Consultation discussions and to take stock of the new government's policy intentions; mission expected to conclude around the "26th" of the month.
- Continued priorities in engagement:
- Creation of an effective anti-corruption framework remains a critical element of IMF engagement with Ukraine.
Greece, India, Pakistan, Bahamas — selected country notes
- Greece:
- IMF Article IV mission in Athens from "September 23".
- IMF does not have a financial program with Greece.
- IMF has consistently argued that a "3.5 percent" primary surplus target was ambitious and has acted as a drag on recovery; IMF previously argued for a lower primary fiscal balance.
- IMF will assess government initiatives in the context of Article IV discussions.
- India:
- Recent GDP figures reflect slower growth than expected.
- IMF assessment: slower growth mainly due to corporate and environmental regulatory uncertainty and lingering weakness in some non-bank financial companies.
- Risks to the outlook are tilted to the downside; IMF to update assessment in the World Economic Outlook.
- Pakistan:
- Key element of IMF-supported program: mobilize domestic tax revenue to fund social and development spending while placing debt on a firm downward trend.
- An IMF team expected to be in Pakistan in the next few days, including Director Jihad Azur.
- Bahamas:
- Severely affected by Hurricane Dorian.
- Authorities have not yet requested IMF support.
- IMF stands ready to help.
Operational notes and communications
- Press briefings are embargoed until "10:30 a.m." Washington time (as noted in opening).
- IMF public communications include forthcoming World Economic Outlook and other flagship publications (Global Financial Stability Report, Fiscal Monitor) around the Annual Meetings.
- Staff reports and published analyses are referenced as documenting program risks and informing public assessment.
Transcript of IMF Press Briefing — September 12, 2019. IMF Communications Department.