## Transcript of IMF Press Briefing

_IMF News, July 13, 2023_

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## Bibliographic details
- Published: July 13, 2023

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### Announcements and upcoming IMF releases
- Press briefing by Julie Kozack, Director, Communications Department – July 13, 2023 at 9:30 a.m. (briefing embargoed until 11am eastern time).
- Travel: Managing Director and the first Managing Director to travel to India on July 17 th and 18th to attend the G20 Finance Ministers and Central Bank Governors meeting.
- Documents and releases:
  - Managing Director’s blog on the G20 and the G20 surveillance note released the morning of the briefing.
  - External Sector Report (ESR) to be released on Wednesday, July 19th.
  - World Economic Outlook Update to be published on Tuesday, July 25th at 9AM local time, eastern time; IMF Chief Economist and Economic Counsellor, Pierre Olivier Goren Shaw, to hold a hybrid press briefing.
- 2023 Annual Meetings: October 9-15 in Marrakesh Morocco; journalist registration open at IMFconnect.org with advised registration before September 28th.
- IMF Executive Board recess: July 31st until August 11th.

*Press officer: Ting Yan — Phone: +1 202 623-7100 — Email: MEDIA@IMF.org — @IMFSpokesperson*

### Global trade fragmentation and U.S.–China export controls
- IMF view:
  - Welcomes recent meetings between Secretary Yellen and top Chinese officials.
  - Urges major trading partners to work together to address core issues that risk fragmenting the global trade and investment system.
- Estimated cost of full or runaway trade fragmentation:
  - Could cost the global economy, seven percent of GDP.
- Policy implication:
  - Continued bilateral and multilateral engagement to forge ties, build common ground, and foster cooperation is vital to global investment and growth.

### Argentina — negotiations, RMB payments, and fifth review
- Status of negotiations:
  - IMF teams are working intensively with Argentine authorities to make progress toward completion of the fifth review.
  - Focus: alternatives to strengthen the authorities' program, enhance reserve accumulation, improve fiscal sustainability, and protect the most vulnerable.
  - Discussions are frequent; details withheld while teams continue to negotiate.
- Letter allegation:
  - IMF understanding is that there is no such letter from Director Zhang to the Board or Managing Director regarding China-Central Bank swaps to pay the IMF.
- Payments in RMB:
  - IMF general practice is not to comment on specific transactions of a member country.
  - Argentine authorities remain current on their financial obligations to the IMF.
  - The RMB is one of the five freely usable currencies that members can and have used to settle obligations with the IMF.
- Timing:
  - Teams aim to make progress and complete the fifth review with a view to advancing the program; feasibility of completing before Board recess reiterated but no firm timing commitment provided.

### Inflation outlook and monetary policy guidance
- United States observations:
  - Headline inflation is declining but remains above target.
  - Core inflation has remained sticky and above target.
  - Goods price inflation moderating; shelter price inflation expected to decline in coming months; non-shelter services inflation not yet on a clear downward trajectory.
- Global pattern:
  - Declines in energy prices are helping reduce headline inflation globally, but core inflation remains sticky in many countries.
- IMF policy advice:
  - Central banks should stay the course on monetary policy until a durable reduction in inflation is achieved.

### Ukraine — EFF review, disbursement, and asset-declaration benchmark
- Recent Board action and funding:
  - On June 29 th, IMF Executive Board completed the first review of the EFF for Ukraine, allowing draw of the equivalent of 890 million U.S. dollars for budget support.
  - EFF approved in March 2023 as part of a total package of support for Ukraine of 115 billion U.S dollars.
- Program performance:
  - All quantitative and structural benchmarks through end-April and June were met, enabling first review completion.
  - Ukrainian economy showing remarkable resilience; gradual economic recovery expected in 2023, but outlook highly uncertain due to war-related uncertainty.
- Asset declaration law:
  - IMF staff consulted with the Ministry of Justice and stakeholders to develop an asset declaration draft law consistent with memorandum commitments.
  - Any enhancements during martial law must not reduce overall effectiveness or deviate from obligations to submit truthful, complete, and accurate declarations.
  - Timely enactment will help mitigate risks and promote public trust and donor confidence.
- Next review:
  - IMF expects the next review later this year; further draw arrangements timing/amount not specified in the briefing.

### Russia — outlook and medium-term impact of the war
- 2023 projection referenced:
  - Last IMF forecast had growth in the positive range of 0.7 percent for 2023.
- Medium-term expectations:
  - Over the medium term, output in Russia expected to be 7 percent lower than the pre-war forecast due to departure of multinationals, loss of human capital, disconnection from global financial markets, and reduced policy buffers.
- Upcoming update:
  - Update of Russian growth forecast to be published in the context of the WEO update later in the month.

### Global debt landscape and policy guidance
- Global trend:
  - Increase in debt levels globally since the pandemic; many low-income and vulnerable countries at or near debt distress.
- IMF policy guidance:
  - Fiscal policy should prudently support the fight against inflation while rebuilding buffers and ensuring sustainability.
- Debt restructuring and creditor coordination:
  - G20 Common Framework delivering on cases (e.g., Chad, Ghana, Zambia) and debt restructuring proceeding also outside the Common Framework (e.g., Sri Lanka).
  - Need for debt restructuring processes to be accelerated, predictable, timely, and to provide breathing space through debt suspension during negotiations.
- Global Sovereign Debt Roundtable (GSDR) activities and outcomes:
  - IMF, World Bank, and India (G20 Chair) initiated the GSDR.
  - First meeting in February brought together Paris Club, non‑Paris Club official creditors (e.g., China, India, Saudi Arabia), private creditors, and debtor countries.
  - April 12th meeting produced tangible progress on information sharing, clarity on MDB roles in net positive financing flows, and work on comparability of treatment.
  - Technical group meeting: June 9th (cutoff dates and state-contingent instruments).
  - Workshop on comparability of treatment: June 15th.
  - GSDR deputies met on June 30th.
  - Workshop on domestic debt restructuring scheduled for September under GSDR aegis.
  - Next meeting of principals scheduled during the Annual Meetings in Marrakesh in October.
- Expectation:
  - Debt and restructuring processes likely to be discussed at the G20 meetings.

### Pakistan — new 9‑month Standby Arrangement (SBA)
- Executive Board approval:
  - On July 12th, Executive Board approved a 9-month standby arrangement for Pakistan in the amount of 3 billion .US. dollars.
  - Immediate disbursement reached about 1.2 billion U.S. dollars.
- Program aim:
  - Support the authorities' economic stabilization program, protect the most vulnerable, and provide a framework for financing from multilateral and bilateral partners.
- Rationale for short duration:
  - SBA intended to fill current balance of payments needs and provide time for Pakistan to implement policies critical to strengthening domestic and external positions.
  - Structural challenges will likely require continued reforms over the medium term.
- IMF commitment:
  - IMF stands ready to work with Pakistan on restoring sustainability and economic stability.
- Follow-up on financing commitments:
  - IMF to follow up bilaterally on questions regarding any new financing commitments requested of Pakistan.

### China — growth and inflation signals; Zambia debt restructuring
- China growth and inflation:
  - April WEO projection: growth in China of 5.2 percent for 2023.
  - Growth reflected strong first quarter after reopening but anticipated to slow over the course of the year.
  - Recent slowing momentum due largely to weaker-than-expected private investment and slower exports after strong Q1 performance.
  - Observed subdued inflation in China reflecting weak demand, slack in the economy, and declining energy prices.
  - Forecast to be updated in the upcoming WEO.
- Zambia debt treatment and IMF program:
  - Background: August 2022 IMF Board approved a 1.3-billion-dollar ECF arrangement for Zambia.
  - April 6th, 2023: staff-level agreement for completing the first review announced.
  - June 22nd: agreement with the official creditor committee on debt treatment reached, providing sufficient financing assurances and clearing a final hurdle for IMF Board consideration.
  - IMF Board meeting on Zambia occurring on the day of the briefing; further details to be communicated after the meeting.

### Mozambique — ECF support and program review
- Program details:
  - Mozambique receiving Fund support through an ECF arrangement for about $456 million.
  - Arrangement approved in May 2022.
- Recent action:
  - Second review completed on July 6th.
  - Executive Board noted program performance was broadly favorable; authorities took substantive actions to address macroeconomic challenges and keep the program on track.
- Policy measures taken:
  - Fiscal: measures to reduce the wage bill and align fiscal outlook with program targets.
  - Monetary: Central Bank actions to contain inflationary pressures and reduce drains on FX reserves.
- IMF engagement:
  - Team continues to engage closely with authorities on their economic plan.

### Senegal and Nigeria — program updates and policy priorities
- Nigeria:
  - Most recent Article IV consultation concluded on February 6, 2023.
  - IMF staff engaging with the transition team on IMF policy recommendations.
  - IMF welcomes removal of fuel subsidies and unification of exchange rate regime.
  - Policy priorities: well-targeted social spending to protect the vulnerable; revenue mobilization through tax administration reforms; fiscal and monetary tightening to prevent further inflation escalation; reduce Central Bank financing of government deficits.
  - IMF expects inflation to increase in coming months in Nigeria.
- Senegal:
  - On June 26th, 2023, Executive Board approved an ECF/EFF blend in the amount of $1.5 billion US.
  - Program objectives: address protracted balance of payments challenges and macroeconomic imbalances.
  - Policy priorities: reduce debt vulnerabilities via fiscal consolidation, strengthen public sector governance and AML/CFT, foster inclusive private-sector-led growth.
  - Emphasis on revenue mobilization and phasing out energy subsidies while protecting the vulnerable.
  - Executive Board also approved a $324-million resilience and sustainability facility to support climate mitigation, adaptation, and integration of climate considerations into the budget.

### Egypt — EFF first review and divestment steps
- IMF program:
  - On December 16, 2022, IMF Executive Board approved an EFF of about $3 billion US for Egypt.
  - Program aims: address vulnerabilities, restore buffers, strengthen social safety nets, and promote sustainable, inclusive growth and job creation.
- Steps toward first review completion:
  - IMF engaged with authorities on divestment strategy, competitive neutrality, and a move toward a flexible exchange rate to alleviate FX shortages.
  - Recent announcement: Egyptian authorities signed contracts to sell equity stakes in state-owned entities worth $1.9 billion US.
  - Divestment is a critical component of the EFF-supported program to withdraw the state from economic activity and provide resources for external financing and debt reduction.

### G20 presidency (India) priorities and IMF role
- India’s G20 presidency theme: one earth, one family, one future.
- Key priorities highlighted:
  - Enhancing financing for global public goods.
  - Strengthening macroeconomic coordination across debt, MDB reform, and digitalization.
- India’s contributions:
  - Co-chairing the GSDR and facilitating progress on debt vulnerabilities and implementation of the common framework.
  - Showcasing digital public infrastructure and advancing understanding of opportunities/risks of digitalization, including macro‑financial implications of crypto assets.
- IMF engagement:
  - Looking forward to advancing G20 priorities at July G20 meetings and the Leaders’ Summit in September.

### BRICS currency, reserve composition, and IMF stance
- IMF position:
  - Decisions on currencies used in trade are for transaction participants.
  - No specific comment on a BRICS currency absent a concrete proposal.
- Reserve currency trend:
  - U.S. dollar share in global foreign reserves declined from around 70 percent at end 1999, to around 58 percent at end 2022.
- Observation:
  - Shifts in currency composition of reserves and trade are historically slow moving.

### Kenya, IMF reforms, and crypto assets
- Kenya:
  - IMF monitoring protests and saddened by reports of violence; hopes for peaceful resolution.
  - Board meeting planned for next week with further details to be provided then.
- IMF reforms and resource priorities (high-level):
  - Three areas highlighted in the Managing Director’s blog:
    - Prompt and successful completion of the 16th Quota Review to increase IMF resources.
    - Replenishment of concessional resources: Poverty Reduction and Growth Trust (PRGT) and Catastrophe Containment and Relief Trust (CCRT).
    - Exploring reforms to the lending toolkit (including precautionary instruments) and better accounting for climate impacts in debt sustainability and support for climate shocks.
- Crypto assets:
  - IMF does not see crypto assets as an appropriate legal tender.
  - Crypto assets are considered in the IMF view as investments needing well-designed regulation and consumer protection.

### Africa — Ghana, Ethiopia, Malawi snapshots
- Ghana:
  - IMF Board approved a three-year, $3 billion ECF arrangement in May 2023.
  - Immediate disbursement: six hundred million, U.S. dollars.
  - Remaining disbursements expected in tranches every six months following program reviews.
  - Program objectives: restore macro stability, ensure debt sustainability, and lay foundations for higher inclusive growth.
  - Next steps: official creditor committee to agree on modalities of debt relief and authorities to engage external private creditors; domestic debt restructuring being finalized.
  - A staff team visited Accra June 8th–15th; formal first review mission to take place in the fall.
- Ethiopia:
  - Hit by multiple shocks: six consecutive years of drought, the pandemic, domestic conflict, and impacts from Russia’s war in Ukraine.
  - Challenges: food insecurity, humanitarian needs, post-conflict reconstruction, high inflation, FX shortages.
  - IMF received a request for financial assistance to support the NEIMF Program; discussions ongoing on policies and reforms.
  - A new program would require clear commitments from development partners and financing assurances from creditors under the G20 common framework.
- Malawi:
  - No specific updates provided in the briefing; IMF to follow up bilaterally on Malawi creditor negotiations and status.

### Closing remarks and follow-up
- Transcript to be made available on IMF.org.
- For clarifications or bilateral questions, media encouraged to contact MEDIA@IMF.org.
- Briefing closed with seasonal well-wishes and notification that next briefing date will be communicated.

*Transcript of IMF Press Briefing — July 13, 2023 — IMF Communications Department*

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## References

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_Source: https://www.imf.org/en/news/articles/2023/07/13/tr071323-transcript-of-imf-press-briefing_