## Transcript of IMF Press Briefing

_IMF News, January 11, 2024_

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## Bibliographic details
- Published: January 11, 2024

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### Announcements and logistics
- Briefing embargoed until 11:00 a.m. Eastern Time.
- Managing Director Kristalina Georgieva and First Deputy Managing Director Gita Gopinath will attend the World Economic Forum 2024 Annual Meetings in Davos:
  - Managing Director in Davos from January 15 to January 19.
  - Staff Discussion Note on "Artificial Intelligence and the Future of Work" to be released Monday, January 15 (made available under embargo via the Press Center).
- Managing Director to travel to Rome on January 28 and 29 to attend the Africa Italy Summit.
- IMF will launch the next World Economic Outlook Update on Tuesday, January 30 in Johannesburg, South Africa.

### Egypt — program discussions and macro needs
- Background:
  - Extended Fund Facility (EFF) approved by the Executive Board in December 2022 in the amount of $3 billion.
  - Managing Director met with Egypt’s Minister of Finance and Central Bank Governor on January 9 at IMF headquarters.
- Ongoing discussions:
  - IMF staff and authorities are discussing a set of policies to support completion of the first and second reviews of Egypt’s EFF.
  - Details such as size of disbursement and specific policy measures are under discussion and will be communicated in due course.
- Policy priorities noted by IMF:
  - Tighten monetary policy.
  - Tighten fiscal policy.
  - Move toward a flexible exchange rate system to support the authorities’ commitment to reduce inflation and to gradually move to an inflation targeting regime.
  - Additional financing seen as critical to successful program implementation.
- Impact of the Israel–Gaza conflict:
  - Conflict has complicated Egypt’s macroeconomic situation.
  - Observed effects include disruptions in the Red Sea and negative impacts on current-account-supporting sectors such as tourism.

### Global outlook and World Economic Outlook (WEO)
- Retrospective and near-term view:
  - 2023 proved more resilient than expected at the beginning of 2023.
  - IMF expects resilience to continue into 2024.
- Key characterizations:
  - Global growth “hovering around 3%” both in 2023 and expected over the medium term.
  - Past global average growth rates were “about 3.8%”.
  - IMF view: poised for a soft landing but significant challenges remain in an environment of high uncertainty and repeated shocks.
- Distribution of resilience:
  - Differentiation across countries; the United States outperformed peers and slightly surpassed its post-pandemic growth trajectory.
  - Low-income countries at risk of falling further behind.

### Ukraine — program status, needs, and forecasts
- Program progress:
  - In December the Board completed the second review of Ukraine’s EFF, enabling a disbursement of about $900 million.
  - Total disbursements under the program to date: $4.5 billion.
  - Program targets met and strong structural progress under challenging conditions.
- Macroeconomic indicators:
  - Latest IMF forecast (released in December) suggested growth in 2023 would be 4.5 percent.
  - Inflation: nearly 27 percent in 2022; expected to be 6 percent in 2023.
- Financing needs for 2024:
  - Estimated financing need: about $42 billion.
  - Official donor support needed: about $32 billion.
- IMF stance:
  - Continued donor/partner financing essential to support macroeconomic stability.
  - IMF remains ready to assess and, if requested, provide additional support consistent with mandate and capacity.

### Russian frozen assets — IMF role and assessment approach
- IMF position:
  - Decisions on seizure or taxation of Russian assets are for relevant country authorities.
  - IMF is monitoring ongoing discussions and will assess potential economic implications for member countries and the international monetary system based on the precise details of any actions.

### BRICS enlargement and global fragmentation / derisking
- IMF view on country groupings:
  - Welcomes countries working together to deepen trade and integration.
- Evidence on derisking and fragmentation:
  - Greenfield FDI increasingly flowing among geopolitically aligned countries.
  - Supply chains lengthening; trade restrictions have gradually increased over the last five years.
- Research findings (from IMF staff regional work):
  - Derisking scenarios may drag on global growth:
    - One scenario: global GDP could fall by 1.8%.
    - Full reshoring scenario: global GDP could decline by 4.5%.

### Argentina — staff-level agreement and program details
- Recent developments:
  - Staff-level agreement for the 7th review of Argentina’s EFF arrangement reached.
  - Subject to Executive Board approval, Argentina will have access to about $4.7 billion U.S. dollars.
- Objectives of agreed package:
  - Restore macroeconomic stability and bring the program back on track after missed targets in late 2023.
  - Support an ambitious stabilization plan with:
    - Large upfront fiscal consolidation.
    - Actions to rebuild international reserves.
    - Correcting relative price misalignments.
    - Strengthening the central bank’s balance sheet.
    - Creating a simpler, rules-based, market-oriented economy.
    - Scaling up social assistance to protect the most vulnerable.
- Specific program targets communicated:
  - Reserve accumulation target: accumulate reserves of $10 billion U.S. dollars by the end of 2024 (a change in reserves of $10 billion).
  - Fiscal target: aim to achieve a primary fiscal surplus of 2% of GDP in 2024.
- Exchange rate and import controls:
  - IMF notes Argentina moving toward a more market-based exchange rate regime and abandoning administrative import controls; addressing debt overhang associated with importers in an orderly fashion.
- Monetary policy stance:
  - Evolving to support money demand and disinflation.
  - Authorities committed to ending central bank credit to the government while strengthening the central bank's balance sheet.
- Implementation notes:
  - Large omnibus legislative package under consideration; authorities are expected to build political support for key fiscal measures.
  - Full staff report, letter of intent, and projections (growth and inflation) will be provided around the time of the Board meeting and publication.

### Japan–Germany nominal GDP comparison
- Technical explanation:
  - Nominal GDP comparisons in U.S. dollars are affected by exchange-rate movements.
  - The Yen has weakened more against the dollar than the Euro, explaining much of the dollar-denominated change.
  - Using PPP weights (Purchasing Power Parity), Japan is projected to remain a larger economy than Germany.
  - Japan projected to have positive growth in 2023; Germany expected to have weaker growth.

### Spain — fiscal consolidation and emergency measures
- IMF policy priorities for Spain:
  - Sustained fiscal consolidation in 2024 and beyond to rebuild fiscal buffers and reduce public debt.
  - Advance reforms to reduce structural unemployment and boost productivity.
- On emergency measures extended into 2024:
  - Fiscal cost for 2024 assessed as lower than in 2023 due to varying degrees of extension.
  - Additional efforts will be required to achieve the envisaged fiscal deficit target of 3% for 2024.
  - IMF staff sees the 3% fiscal deficit target as still appropriate.

### Mozambique, Angola, and DRC (Africa updates)
- Mozambique:
  - Executive Board completed the third review under the ECF arrangement; program performance satisfactory and on track.
  - Authorities implemented immediate policy adjustments after earlier fiscal slippages.
  - Continued fiscal efforts warranted to reduce financing needs and contain debt vulnerabilities.
  - Parliamentary approval in December 2023 of a sovereign wealth fund bill noted as an important step for transparency and sound natural resource management.
- Angola and DRC:
  - No fresh details provided in the briefing; IMF will follow up bilaterally.

### Red Sea attacks, PortWatch data, and Yemen implications
- Red Sea trade significance and observed impacts:
  - Transport through the Red Sea accounts for 10% of global trade flows.
  - Ongoing attacks raise shipping times and costs, potentially applying upward pressure on prices.
- PortWatch indicators (10-day period ended January 2):
  - Volume through the Suez Canal decreased by 28% year over year.
  - Shipping volumes via the Cape of Good Hope increased by 67%.
- IMF monitoring: closely tracking developments and shipping-route shifts; will provide updates as analysis continues.

### Sri Lanka — program progress and next steps
- Recent actions:
  - Executive Board approved the first review of the program on December 12, 2023 with a disbursement of $337 U.S. dollars.
  - Program performance assessed as satisfactory.
- Current mission:
  - A staff visit is on the ground to discuss recent developments and follow up on program targets and commitments.
  - Next program review mission to be scheduled later.
- Debt-restructuring steps:
  - Conclude negotiations with external commercial creditors and implement agreements with official creditors.
  - Domestic debt operations largely completed.

### Crypto assets and recent U.S. SEC decision
- IMF assessment of crypto assets:
  - Potential benefits: cheaper and more transparent payments.
  - Risks: macro-financial risks including effects on monetary policy effectiveness and financial stability; consumer protection concerns.
  - IMF recommends a consistent, coordinated, and comprehensive regulatory framework to balance innovation benefits and risks.
- On the SEC approval of spot bitcoin ETFs:
  - IMF is analyzing the decision and will have more to say later.

### Tunisia — mission status
- A mission scheduled for December 5–19 was postponed by the authorities.
- IMF remains a strong partner and stands ready to conduct Article IV consultations and support reform efforts.

### Ghana — program review and financing
- Program status:
  - On October 6, 2023, IMF staff reached a staff-level agreement with Ghana for the first review.
  - Executive Board completion of the review would give Ghana access to US$ 600 million.
- Preconditions and creditor engagement:
  - Timely completion of reviews requires agreement between Ghana and official creditors on a debt treatment consistent with program objectives and the financing assurances provided in May 2023.
  - Discussions between Ghana and the official creditor committee are ongoing with good progress, aiming to bring the program to the Board soon.
- On draft term sheet sufficiency:
  - IMF indicated no additional detail beyond prior communication; further comment to be provided if possible.

### Closing remarks
- Transcript to be made available on IMF.org.
- Media contact: MEDIA@IMF.org.

*Transcript of IMF Press Briefing, January 11, 2024 — IMF Communications Department*

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_Source: https://www.imf.org/en/news/articles/2024/01/11/tr011124-transcript-of-imf-press-briefing_