## Transcript of IMF Press Briefing (July 11, 2024)

_IMF News, July 11, 2024_

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## Bibliographic details
- Published: July 11, 2024

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### Announcements, schedule, and outreach
- Bretton Woods at 80 Initiative launched by the IMF and the World Bank; led by Sri Mulyani Indrawati, Patrick Achi, and Mark Malloch Brown; will work closely with Kristalina Georgieva and Ajay Banga.
- World Economic Outlook (WEO) Update release and press conference: Tuesday, July 16th at 09:00 a.m.
- External Sector Report release: Friday, July 12th.
- Managing Director travel:
  - Paraguay visit with IADB President Ilan Goldfajn: July 22nd and 23rd.
  - G-20 Finance Ministers and Central Bank Governors Meeting (Rio de Janeiro): July 25th to 26th.
- First Managing Director Gita Gopinath speaking at Reinventing Bretton Woods Central Bank of Peru Conference: July 19th in Cusco, Peru; fireside chat live streamed at 10:00 a.m. D.C. time on IMF channels.
- IMF new presence on WhatsApp for news and updates.

### United States: macro performance, inflation, monetary policy, and fiscal risks
Findings and assessments:
- U.S. economic performance described as "remarkably strong"; both activity and employment have exceeded expectations.
- Disinflation process is underway.
- IMF supports the Fed's "data dependent and cautious approach" to monetary policy.
- IMF expects "the Fed will be in a position to reduce rates later this year."
Fiscal and debt observations:
- IMF has advised action to reduce "high fiscal deficit" and to put debt on a "decisive downward path."
- Recent significant fiscal legislation in 2020 to 2022 had "lasting, positive impact" on reshaping the U.S. economy, but current fiscal deficit remains "too high."
- Net interest payments of the federal government:
  - FY 2023: 2.4 percent of GDP.
  - Current FY (unnamed year): 3.2 percent of GDP.
- IMF estimates net interest payments "are expected to remain elevated even in the medium-term" due to high primary fiscal deficits and resulting public debt.
Policy recommendation:
- Implement a "broad set of fiscal measures" now—while the economy is strong—to place debt-to-GDP on a downward trajectory.
- Full details of recommended measures will appear in the forthcoming 2024 Article IV Report.

### Kenya: political disruption, tax measures, and IMF program engagement
Context and risks:
- President Ruto dismissed most of his cabinet amid public reaction to proposed tax increases and suspension of the Finance Bill of 2024.
- Kenya faces the common low-income country "funding squeeze" driven by tighter global financial conditions and reduced concessional financing.
IMF program goals and response:
- Program objective: establish sound macroeconomic fundamentals to foster sustainable and inclusive growth and job creation.
- Program includes initiatives to improve governance, transparency, and responsible use of public funds, with emphasis on protecting the most vulnerable.
- IMF is in "active and constructive discussion" with Kenyan authorities; at each program review the IMF assesses developments and makes adjustments as warranted.
Policy emphasis:
- Policies under discussion should undergo broad consultation to build public support and a balanced path forward will be sought.

### Angola and The Gambia: recent developments and program status
Angola:
- Executive Board concluded a Post Financing Consultation on July 3rd.
- 2023 challenges: weaker oil production and weaker oil prices.
- Near-term outlook: economic growth expected to recover; inflation expected to remain "temporary, elevated in 2024" and then decline.
- Recommendation: continue fiscal consolidation and growth-enhancing reforms with IMF technical assistance and capacity development.
Gambia:
- Executive Board completed the First Review of The Gambia's Extended Credit Facility on July 9th.
- Disbursement: "nearly $11 million U.S. dollars" for the First Review; total disbursements under the ECF about "$22 billion -- sorry, million -- U.S. dollars."
- 2023 economic growth: 5.3 percent.
- Inflation: has come down but remains above the central bank's medium-term objective.
- Recommendation: continue reforms to address medium- and long-term macroeconomic challenges and catalyze additional financing.

### Argentina: program implementation, reforms, and potential future arrangement
Recent progress:
- Since approval of the Eighth Review (July 13th), Congress approved critical fiscal and structural measures, notably reform of the personal income tax to bring more higher-income formal sector workers into the tax net.
- Preliminary data: fiscal and reserve targets "continue to be met"; high-frequency data indicate further reductions in inflation and some stabilization of activity and demand.
IMF engagement and next steps:
- Current framework: engagement remains within the EFF Arrangement.
- Staff will engage on a potential new arrangement if the authorities formally request one; "no specific timetable" at this stage.
- IMF underscores the inevitability of volatility during stabilization programs and stresses the need for policy agility to address underlying macroeconomic imbalances.
Leadership and negotiations:
- Managing Director has "full confidence in Rodrigo Valdés and her entire Senior Leadership Team"; IMF engagement with Argentine authorities remains "active and constructive."
- Formal G-20 bilateral meetings involving the Managing Director are not yet finalized.

### Pakistan: program discussions and objectives
Status and objectives:
- Staff mission visited Islamabad May 13th through 23rd; discussions on a medium-term homegrown reform program that could be supported under an EFF arrangement continue.
- Aims of the proposed program: cement economic credibility, transition from stabilization to "strong, inclusive, and resilient growth," and improve living standards.
- Recent 2023 Stand-By Arrangement helped return Pakistan to stability; goal is to maintain and broaden that stability.
Operational note:
- Discussions between Staff and authorities are ongoing; IMF will communicate further details when available.

### Egypt: Third Review timing, reform progress, and external shocks
Program status and conditional access:
- Consideration of the Third Review scheduled for July 29th; Board approval would provide Egypt with access to about "$820 million U.S. dollars."
Reform outcomes and macro indicators:
- Inflation fell for four consecutive months: from 35.6 percent in February to "under 28 percent in June."
- Foreign exchange demand backlog eliminated; private sector activity showing signs of reversal after a three and a half-year contraction.
External shock and fiscal impact:
- Suez Canal receipts have "fallen by more than half compared to a year ago," reducing a key source of foreign exchange and fiscal revenue.
Operational detail:
- Postponement of Board consideration to July 29th described as related to finalizing details; IMF staff "confident on the path forward."

### IMF surcharge policy review
Review process and aims:
- A "comprehensive review of IMF surcharges" is underway as part of the Executive Board's work program for this fiscal year.
- The review will:
  - Take stock of experience since the last review in 2016.
  - Present options for possible changes to the policy, weighing implications for borrowing members and the IMF's credit risk management framework.
Governance and consensus requirements:
- Any changes to surcharge policy require a 70 percent majority of voting power in the Executive Board per the Articles of Agreement; building broad member consensus is essential.
Engagement status:
- Staff engagement with the Executive Board has started; informal engagement with the Board occurs as part of the process.

### Sri Lanka: program progress, debt restructuring, and social pressures
Program progress:
- Executive Board completed the 2024 Article IV Consultation and the Second Review, providing access to about "$336 million U.S. dollars."
- Positive indicators: real GDP growth resumed from Q3 2023, rapid decline in inflation, robust accumulation of international reserves, and improved domestic revenue mobilization.
Debt restructuring and assessment:
- IMF staff "is in the process of assessing the agreed terms of the debt restructuring" and whether they align with program parameters; assessment pending.
Social and fiscal tradeoffs:
- Government faces demands for salary increases; IMF emphasizes protecting the poor and vulnerable and restoring fiscal and debt sustainability to avoid recurrence of the 2022 crisis.
Policy measures noted:
- Emphasis on ensuring taxes are paid by those who can afford them, improving tax administration, and limiting the size of tax exemptions.
- Program includes anti-corruption and good governance measures and "a strong focus" on protecting vulnerable populations.

### Ukraine: program performance, disbursements, and repayment capacity
Program status and disbursements:
- Executive Board completed the Fourth Review of Ukraine's EFF on June 28th, enabling a disbursement of about "$2.2 billion U.S. dollars"; total disbursements under the program to date: "$7.6 billion U.S. dollars."
Macro outlook and risks:
- Authorities' performance under the program remains "very strong" despite security challenges and attacks on infrastructure.
- Growth projection: "2.5 to 3.5 percent" this year.
- Inflation expected to "edge up"; risks remain "exceptionally high" due to war-related uncertainties.
Repayment capacity and use of IMF resources:
- IMF assessment: "Ukraine has sufficient capacity to repay the IMF" supported by policy commitments to restore external viability and donor assurances regarding outstanding amounts and use of resources.
- IMF resources are provided to address balance of payments needs and are "not directed toward any specific budgetary line item."

### Global role and IMF policy priorities
- IMF emphasizes its role as a convener of 190 members to foster international economic cooperation, provide policy advice, and deliver financial support when members face shocks.
- Recognition of a "shock-prone world": climate shocks, conflicts, the Pandemic, food insecurity, and other crises require adapting IMF instruments and policies.
- Recent IMF initiatives cited: emergency financing during the Pandemic, SDR allocation changes, access-level adjustments, fundraising for concessional financing, and quota reforms.
- IMF commitment: continue adapting policies and instruments to meet evolving member needs.

*Transcript of IMF Press Briefing, IMF Communications Department, July 11, 2024.*

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## References

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_Source: https://www.imf.org/en/news/articles/2024/07/12/tr071124-transcript-of-imf-press-briefing_