Speaker: Ms. Julie Kozack, Director of the Communications Department at the IMF
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MS. KOZACK: Hello, everyone. Good morning. Welcome to this IMF Press Briefing. It's great to see you all here in person and online. I'm Julie Kozack, Director of the Communications Department.
As usual, this briefing is embargoed until 11:00 a.m. Eastern Time in the United States. As usual, I will start with a few announcements, and then we'll move to take your questions in person, on WebEx, and via the Press Center.
On June 9th, the Managing Director will be in Brussels to participate in the One Europe, One Market Summit. On June 11th, she will attend the Eurogroup and the ECOFIN meetings in Luxembourg, where she will present the findings of the 2026 Euro Area Annual Consultation. From June 12th through 14th, the Managing Director will visit Andorra, where she will meet with the authorities and attend a ceremony to celebrate Andorra's membership in the IMF. The Managing Director will then travel to Évian-les-Bains in France to attend the G7 Leaders’ Summit, and that will be on June 15th and 16th.
After that, on June 17th and 18th, she will travel to Vienna to participate in a fireside chat with the Governor of the Central Bank of Austria for its 53rd Annual Economic Conference. And she will also sign a memorandum of understanding with the Austrian authorities to renew our collaboration through the Joint Vienna Institute. The Managing Director will conclude her trip with a visit to Sofia, Bulgaria, on June 22nd, where she will hold meetings with counterparts.
Turning to our first Deputy Managing Director, Dan Katz, he will travel to Japan from June 9th through 12th, where he will meet with the authorities and participate in an event with students at the University of Tokyo. On June 17th, FDMD Katz will have a fireside chat at the Atlantic Council's Geoeconomics Center, moderated by Josh Lipsky, on stablecoins and tokenization, as well as cross-border payments. Staying with the FDMD, on June 22nd and 23rd, he will visit the United Kingdom, where he will meet with representatives from the financial sector and the Bank of England.
DMD Kenji Okamura will visit Thailand on June 4th and 5th, where he will meet the Deputy Prime Minister and other senior officials to discuss the government's medium-term policy priorities as well as progress on preparations for the 2026 Annual Meetings.
Deputy Managing Director Bo Li will deliver opening remarks on June 10th at IMF headquarters for the launch of StatGPT, the Fund's AI-powered platform for official statistics. After that, DMD Li will visit Dalian, China, on June 23, where he will speak on an energy security panel at the World Economic Forum's Annual Meetings of New Champions.
And with that, I will wrap up our announcements, and I'll now open the floor for your questions. For those of you connecting virtually, please turn on both your camera and microphone when speaking.
The floor is open. Okay, David, let's go to you.
QUESTIONER: Thanks, Julie. In about two weeks, we have a brand-new Fed chair who's going to hold his first meeting as chair at the first meeting of the FOMC under his new leadership. Just wonder if you can kind of describe to us where the IMF's head is at on -- on inflation these days. Obviously, the president would like this new chair to -- to cut rates. The inflation numbers have been running hot because of the energy shock, yet there's, you know, concerns about the job market underneath. So, if you can kind of give us your assessment of that. I mean, is this sort of U.S. economy really running on an AI buildout that's starting to fade? Thank you.
MS. KOZACK: Thanks. Any other questions on the U.S.?
QUESTIONER: I just had a question on WTO and the involvement of the IMF after the U.S. have submitted a justification to WTO members on why they are raising tariffs, mentioning a balance of payments issue. So, my understanding is the IMF is required to give an input on this. So, trying to understand how that works, if there's any specific timing, has any conversations have started on this, and also which department in the IMF is supposed to do this? Thank you so much.
MS. KOZACK: Any other questions on the U.S.? Let me then start with the U.S. economy, and then I'll move to the WTO question. So, what I'll start with, just a bit of a sense of where we see the U.S. economy and inflation.
What we see in the U.S., just looking back, is that there was a rapid pace of expansion after the pandemic. And now we see economic activity in the U.S. returning to a more moderate growth of around 2 percent. But we have seen in the -- even though there's a moderation in growth, there has been solid momentum in the economy, including in the first quarter of 2026, where GDP expanded by 1.6 percent. This reflected in part the rebound in government consumption following the shutdown in the fourth quarter of 2025.
So, we saw a bounce back there. And investment, of course, is quite strong in the U.S. There are some offsets when we look at U.S. growth because there are large capital imports. And they tend -- have tended to reduce net exports. And that's typical when you have high investment, to also often see high capital imports. Gains in labor productivity in the U.S. have continued to be very strong. Cumulatively over the past three years, output per hour in the U.S. grew by 2.7 percent per year. Job growth in the U.S. has been slowing, and that reflects both lower labor supply as well as a slowdown in labor demand.
Now, turning to inflation, what we've seen is that the pass-through from higher tariffs has been gradually materializing in inflation. We do see also renewed pressure on headline inflation from higher oil prices due to the war in the Middle East. We currently project that inflation in the U.S. will return to the 2 percent target with delay by end 2027 now.
QUESTIONER: Was that prior?
MS. KOZACK: It was mid -- mid-2027 is -- was there. So we've now delayed a bit further the return to target. So this -- and we do see, you know, sort of upside risk to inflation, and that it implies that the Fed's policy actions will need to proceed with caution and will need to be carefully calibrated to incoming data. And clear communication from the Fed will continue to be essential.
Now, turning to the question on the WTO. So, what I can share with you on this is that there was a Balance of Payments Committee meeting of the WTO on May 5th, and at that point, WTO members agreed to proceed with consultations regarding the U.S. tariff notifications. The IMF will participate in these consultations in line with our institutional responsibilities and in line with the established framework for collaboration with the WTO. Our role specifically is to provide a statement on the members, in this case the U.S., macroeconomic its balance of payments position.
And I think, as you know, we recently concluded the Article IV Consultation from the U.S., so that will obviously provide a basis for the provision of that statement. Right now, I don't have further information on precise timing. Once we have that information, we'll be happy to include it, including any details on the potential publication of a statement.
QUESTIONER: Thank you, Julie. So, one specific question on oil markets. Last week, the IMF, alongside with the World Bank, IEA, and WTO, issued a joint statement that global oil inventories are being drawn down at a record pace in response to the major loss of supply through the Strait of Hormuz, and there are also risks for fuel security and broader economic resilience. So, my question is specific. From the IMF standpoint, does such measure as a U.S. license for Russian seaborne oil really help to relieve the situation on the global energy market? And from the IMF standpoint, taking into account that the final decision is under Treasury's competence, shall it be prolonged for the longer period of time as prices for oil remain elevated and the situation in the Strait of Hormuz is as we see right now as it was before?
MS. KOZACK: Thanks. Are there other questions on sort of oil markets? Yeah, please go ahead.
QUESTIONER: Thanks so much. Similarly, on markets, we've heard repeatedly from Trump administration officials, including the president, that he expects oil prices and prices more broadly to fall quite quickly once the Strait of Hormuz is reopened. I'm wondering if you can speak to how quickly IMF projects a return to pre-war prices if and when the strait reopens?
QUESTIONER: Thank you. My question is related to that. How is the Fund rethinking fiscal and framework -- fiscal policy and framework for the African continent, given some of the developments, like the Middle East crisis and global development? Thank you.
MS. KOZACK: Let me just ask if anyone online wants to come in on this topic of oil prices. If not, let me go ahead and answer this.
So, what we've seen is that oil prices have increased by about 35 percent since the start of the war in the Middle East. But following some of the recent discussions, talks of progress in negotiations between the U.S. and Iran, oil prices are now only about 3 percent higher than they were when we -- in our WEO reference scenario. So, since March, they've increased by 35 percent. But since we made our assumptions that went into our reference scenario for the WEO, oil prices are only about 3 percent higher. So we've seen quite a lot of movement in oil prices, initially up, up and down over time, and at times stability. What I can say is that the bulk of the increase in oil prices happened in early March as oil shipments through the Strait of Hormuz stopped. Major oil facilities have been damaged in the war or shut down. And so overall, this has curtailed about 14 million barrels per day of oil production.
When it comes to inventories, global strategic and commercial inventories, they stood at a high -- a five-year high of more than 8 billion barrels before the war started. And they've been partially depleted, and they are expected to reach a 5-year low of 7.5 billion barrels in July. We also are seeing that the oil price is kind of having ripple effects on oil products and the reserves of oil products, such as you know, jet fuels and refined products, petrochemicals. Those supplies are also -- or their reserves are also reaching low levels. European and Asian jet fuel prices, for example, are up 35 percent from pre-war levels. And gasoline prices are up about 40 percent since the start of the war.
Now, what does it mean? I mean, obviously, the best solution for this is for the Strait of Hormuz to open. And what we do see also is that, you know, there's some drawdown of inventories, as I just discussed, and countries looking to reroute production away from the Strait of Hormuz. So that's kind of how we see things now. I'm not going to comment on kind of specific measures that could be taken, but that's kind of how we see overall the oil market right now.
Now, when we make our forecasts, we use the futures curve for oil. We use the market future curve for oil. So we don't make our own in-house projection on oil prices. We use what the market provides. So the way we -- you asked, kind of, could we see prices falling more quickly? I think the way we look at it is that if that the price of oil and its path will depend very much on the duration of the war and how quickly the Strait of Hormuz reopens and when it reopens. Right now, what we see is in the futures curve is that the spot price, the near-term price, is higher than the futures price. So that tells you a little bit of sense of what the market is thinking. And then we would take that into account as we make our projections.
And then, on your question on kind of what does this mean for fiscal policy and our fiscal advice for African countries, what I would say there is that this shock is happening at a time when, not just for Africa, but globally, fiscal space for many countries was already limited or constrained because this is one of a series of shocks that has happened. And for that reason, we are really advising countries to be very prudent in their fiscal responses. And so, there we are recommending that if policy support is needed, if fiscal support is needed, that it be targeted to the most vulnerable households and firms. So target fiscal policy to the-- fiscal policy support to the most vulnerable groups.
And then I would say, in addition, for Africa, when we think about the overall fiscal policy advice, given fiscal -- limited fiscal space, domestic resource mobilization is also a key pillar of our advice for many countries globally, but in Africa in particular. And the reason for that is that when we look at things like revenue-to-GDP ratios, in many low-income countries and African countries, they tend to be often very low, and that does not create enough domestically sourced revenue to meet the really significant development needs. So, domestic resource mobilization both on the revenue side, but also in terms of developing local capital markets so that countries have a source of local financing, you know, really mobilizing the homegrown savings, so that to meet -- help meet the economy's development needs. I would say that that's the way we're thinking of kind of fiscal policy advice and fiscal frameworks for African countries and many low-income countries more broadly.
MS. KOZACK: You’re welcome. I'm going to -- let's go to you.
QUESTIONER: I just wanted a quick update on that we know that Bangladesh has approached the IMF for a new program or for developing a new program. How would that work? Obviously, there is an existing $5.5 billion ECF, EFF, and RSF. So, will those be extended? And what do we know about what the new program might look like?
MS. KOZACK: Thank you. Any other questions on Bangladesh? If you're online and you'd like to come in on Bangladesh, please just do so.
QUESTIONER: Hi, can I speak? This is Tauhid from Bangladesh.
MS. KOZACK: Yes, please go ahead.
QUESTIONER: Hi Julie. I was just wondering to know, and I was just trying to ask the same question that earlier the journalist asked, that how is going to be the next financial arrangement with Bangladesh's new government with the IMF, considering the fact you have you have already shown concern regarding the overall revenue situation and the banking situation here in Bangladesh? And considering the fact that inflation is really rising right now, especially after adjusting the price of fuel and electricity recently, how do you see Bangladesh in a, you know, in near future, as you are trying for a new arrangement in financing, and the new mission can be visiting Bangladesh soon, anytime soon? Thank you very much.
MS. KOZACK: Okay, very good. Let me take these questions on Bangladesh.
So, as you've noted, the Bangladeshi authorities have requested a new IMF-supported program. Our staff are in discussions with the authorities on their reform agenda and their policy priorities. We -- what I can say, I think, just maybe stepping back a little bit, is, you know, past IMF-supported programs have helped safeguard macroeconomic stability in Bangladesh, but there is still work to do. And a few things that we see, which indeed have been mentioned, one is high inflation persists in Bangladesh. There are weaknesses in the banking sector. There's low revenue mobilization, just like I was speaking about in the previous question. So, revenue to GDP ratios are low, and there's continued, you know, global shocks and uncertainty, which are all affecting the Bangladesh economy.
We remain, we at the IMF, we remain a committed partner to Bangladesh in its efforts to continue on this journey to really secure lasting economic and financial stability for the country and to strengthen its resilience given a very uncertain global environment. And ultimately, what we aim to support in Bangladesh is strong and inclusive growth for the country.
Now, in terms of kind of how does the mechanics of how things work. So, there's a new program request. Staff are discussing that with the authorities. And what will happen typically is, as the new program is -- as we reach a Staff-Level Agreement, and then it would be presented to our Board. At that time, the old program will be canceled. So, in a sense, right now, we're focused -- the focus is very squarely on the new program. And in part, that's because the macroeconomic and political context in Bangladesh has changed. So, it's appropriate to now switch to a new program, have an in-depth discussion with the new authorities on their priorities, and then formulate a new IMF-supported program around those priorities and reforms.
QUESTIONER: Hi, Julie. Do you believe it is possible for the government to fulfill its commitments to pass pension and tax reform with the presidential campaign just eight months away? Thank you.
QUESTIONER: Hi Julie. Good morning. The Staff Report notes that political uncertainties ahead of Argentina's 2027 presidential election could impact the implementation of the program and that near-term risks remain elevated. However, Minister Luis Caputo recently stated that the economy will steamroll politics and that President Milei will win the elections comfortably in 2027. Is the IMF concerned that the Argentine government may be overconfident in downplaying that political risks and tighter global financial conditions? And one more on Article IV that refers to governance challenges, noting concerns about limited judicial independence and anti-corruption frameworks. Is the government -- if the government fails to make progress in these topics, how could this affect the program and economic progress in Argentina? Thank you so much.
MS. KOZACK: Okay. And I know I have online -- let's start with you. I'm not hearing. All right. Maybe we're having technical difficulties.
QUESTIONER: Thank you. So it's going to be two quick questions. So, the first one is the Argentine Chambers of Commerce, reflecting the tax reform requested by the IMF, especially regarding the income tax and the so-called "Monotributo," arguing that it could be regressive for consumption that has been falling for the first month of this year. Is this a concern for the IMF? And the second one is that Argentina's country risk has fallen below 500 points this week. Does the IMF believe that this allows the country to return to international markets, or does it believe that maybe other alternative sources of financing, such as repo, a repurchase agreement, will be necessary, considering the $4.3 billion in debt payments set for early July?
MS. KOZACK: Thank you. Okay. Yes, we can hear. Yep, we can hear you.
QUESTIONER: I can't get my camera to work. Recently this week, Minister Caputo said that they could purchase a lot more dollars than the agreed amount. $10 billion, it's the agreed. And he said Argentina could go up to $24 billion. Do you -- does the IMF recommend increasing the amount as much as possible? Is there any risk for the FX? Is there anything that you see in that front?
MS. KOZACK: Anything else in Argentina? No. Anything else on Argentina? I’ll give you one more chance to come in if you are able to?
Okay. Let me, let me go ahead with Argentina. So, I think, as many of you know, the IMF's Executive Board recently approved the Second Review of the EFF and also concluded the 2026 Article IV Consultation for Argentina. We've published the Staff Report because it's a combined Article IV and program review Staff Report. It's quite extensive. It has a lot of details on the agreement under the -- for the Second Review, but also on medium-term issues facing the country. So here today, I'm going to limit my remarks to just a few key points, and then, you know, we will let you rely on the report for some of the more detailed questions.
So, the first point I want to make is that -- is to recognize, you know, really the significant progress that's been made in stabilizing Argentina's economy over the last 2.5 years, which was obviously highlighted in the -- in the Article IV report in particular. Annual inflation fell from around 200 percent at the end of 2023 to 30 percent today. The fiscal deficit has been reduced by about 5 percentage points of GDP. Argentina has recorded consecutive primary fiscal surpluses for the first time in nearly two decades. Important reforms have been implemented on fiscal policy, on trade, and on the labor market, some with the support of the Argentine Congress. And the goal of these reforms is to create a more open and market-based economy. And here I really want to emphasize this point in particular. All of this progress has led to a very significant reduction in poverty in Argentina. Poverty fell from over 50 percent to under 30 percent more recently. And that's just in a few years. And this has been -- this decline in poverty has also been supported by improved social assistance.
The second point I want to make is that important efforts are underway in Argentina to strengthen external stability and resilience. And since the start of this year, so since the start of 2026, the Central Bank has already purchased $10 billion in foreign exchange in terms of reserves. That means that net international reserves, the net international reserve position of the country, have risen by over $7 billion, and that means they're already close to reaching the target for the end of this year. This much better-than-anticipated performance reflects a stronger trade balance and capital inflows. The trade balance is partly on account of improved confidence and structural improvements in the mining, energy, and agricultural sectors. Argentina, as a net energy exporter, is having some benefit from-- on the external sector from the increase in energy prices. And as a result of this improvement in the external position and strengthening of the external position, Argentina's spreads have narrowed to below 500 basis points, and it was recently upgraded by one of the credit rating agencies.
And then the third point I want to make is that the direction of travel remains very encouraging in Argentina. There is a shared recognition of the need to sustain the progress that has been made to further reduce inflation, to strengthen external stability, and to improve the country's growth prospects. The focus in the near term is going to be on continuing to build resilience and Argentina's external buffers. And that will allow Argentina to better manage shocks that are -- that will come as they have been coming for the whole global economy. And also, over time, to help Argentina secure stable access to both local capital markets and international capital markets at, at more favorable terms.
And then maybe the last thing I'll say is with respect to the tax and pension reforms, is just to mention here that the authorities are fully committed to their fiscal anchor. They are planning to further strengthen the tax, pension, and fiscal frameworks over time. It's worth noting that important efforts have already been taken, including through a gradual reduction in trade taxes, which are distortionary, and the adoption of a more predictable pension indexation formula. These are very important reforms for Argentina, with potentially very significant benefits for the efficiency, equity, and growth of the country over time. And it's natural, of course, in this context that they're being carefully considered.
All right, let's go here to the back.
QUESTIONER: Hi I would like to ask some more questions about the Strait of Hormuz thing. It is now the peace deal is discussed between into parties. So, I would like to know if a peace agreement were reached between the United States and Iran, what would be likely consequence of the potential Strait of Hormuz opening, and how would such a deal impact Asian economies, including China and South Korea?
QUESTIONER: Thanks for taking my question. Just following up on that, and as well as the earlier line of questioning on oil prices. Earlier, you mentioned that oil prices are 3 percent higher than the reference forecast today, that the spot price is higher than the future. So just going back, so does this mean that the IMF is viewing that the global economy is closer towards the reference forecast today, or are we still moving towards that more adverse scenario given where oil prices stand today? Thank you.
MS. KOZACK: Okay, any other questions on sort of the global economy? And anyone online wants to come in on the global economy? So let me take -- let me take this question.
MS. KOZACK: Yep. Please go ahead.
QUESTIONER: I wanted to come specifically on the part that things have really gone worse when it comes to the -- how the economies have been impacted because of the war in the Middle East. And while we are seeing some respite with the oil prices, the impact is going to take longer. But despite this, there has come in some comments from the USTR on additional tariffs. I wanted to take in IMF's view on how will this have an impact on the global economy.
MS. KOZACK: Okay, so starting maybe with the bigger picture of where we are with the global economy. So, as you'll recall, at the time of the April WEO, we focused on, you know, the shock from the war and a range of possibilities, you know, possible outcomes for the global economy. But before the war started, we also were seeing positive momentum in the global economy. And we had talked about earlier, you know, the resilience, the remarkable resilience of the global economy. So based on the recent data that we're seeing, both of these forces are still present in how we think about the global outlook.
So, you know, with the war continuing, we do have higher commodity prices, as we've discussed, and supply chain disruptions, and they're now starting to show up in some of the macroeconomic data. So, for example, April manufacturing PMI surveys do point to rising input costs across many economies, driven by longer delivery times and higher energy costs.
There are also indications, as we discussed, that the shock is feeding into inflation. Short-term inflation expectations have risen. Markets are now-- have gone from pricing central bank rate cuts, you know, at the start of the year, they were pricing in rate cuts by central banks, and now markets are pricing in rate hikes more recently. And we've also seen increases in sovereign bond yields since the war began. And when we look at the equity market, gains in the equity market have become more concentrated.
Now, at the same time, there is still -- we also do see signs in the data of some of the underlying resilience that, you know, that we've -- we had seen earlier. So, for example, growth in the first quarter of 2026 surprised to the upside in some economies. And in some of those economies, this was really backed by investment in AI and technology. So there are some suggestions that the growth momentum in some countries, at least, has continued into 2026. And financial conditions in general have remained resilient, including in emerging economies where we've seen, for example, bond issuance by emerging economies and even frontier markets rebounding sharply in April. And sovereign spreads are at near-decade lows. So, financial conditions have been quite accommodative.
But I think the key point in some -- in all of this is that these forces, though they're not affecting all economies in the same way, and that brings us back to the point that we were making in April about the asymmetric impact of the shock. So not all countries are benefiting from robust tech investment. Some countries are hit harder by the war than others. We're particularly concerned about energy-importing countries that are, that are vulnerable or have weaker fiscal space. And that those concerns that we have and our worries about the asymmetry of the shock and the more vulnerable countries that will be affected, that those concerns remain even though we have seen some of this resilience in other countries. And so, all of this will come together in the July WEO update, where we'll provide a full sense of where we are.
In terms of the impact on some Asian economies, most Asian economies are net energy importers. Some have been hit harder than others. And for some, one of the main reasons is that some countries like Korea and China have reserves and buffers that they can draw down on to help smooth out the impact of the shock on their economies. Countries with weaker buffers, including, you know, reserves of oil and refined products, are facing a harder time at the moment. And of course, should the Strait of Hormuz open, that will be very important for the global economy. But I think it's also important to remember that with some of the infrastructure damage, it still will take time for a full opening of the Strait of Hormuz to really translate, I think, fully into positive impacts on the ground for some countries, given the time it takes for tankers to get from the Strait of Hormuz to their final destination. And also, we'd have to understand what is the impact of infrastructure damage on production.
QUESTIONER: May I ask one more question about the trade issues? You know, when do you expect -- do you have -- do you have any kind of timeline in your mind when the trade gets back to the normal state space, like in the past?
MS. KOZACK: So, in terms of trade more broadly, I'd say what we're seeing, what we've been seeing over the last 18 months, is really a reconfiguration of global trade. So, we've seen the tariffs come into play. We've also seen in countries trade happening in different patterns. Trade patterns have been evolving. So, I think our approach to thinking about trade is really that we are encouraging our members to keep trade as an engine of growth. For many countries, trade has been an engine of growth for them. It has been an engine of growth for much of the global economy. And so, we're looking at new patterns of trade. We're encouraging countries to look at regional integration. There's a lot of unexploited opportunities regionally for deeper integration, not only in trade but in finance. So, it's -- I think we don't see necessarily that we go back to something from the past, but it's really about what is a new dynamic trading system going to look like going forward, and we're encouraging our members to really look for those new opportunities that are coming up.
And maybe just briefly, you also asked about the tariffs. Maybe just to say on the tariffs that, of course, we're closely following. We're following some of the announcements, and we continue to just encourage all of our member countries to kind of come together and look for cooperative solutions to any trade disagreements.
Yep, go ahead.
QUESTIONER: Thanks. I just wanted to -- because you've just spoken about kind of how the broad effects have been playing out, and we're talking about the WEO update, where I guess will update where we are in which scenario. Also, at the Spring Meetings, the MD said that negotiations were ongoing with about 12 countries, I believe, at the time, on financial assistance potentially. Obviously, Bangladesh was one of those, and that has now turned into a formal request. Any updates on that front and also on the $20 to $50 billion amount that she spoke about? Is there any updates to what the IMF believes is required for those countries?
MS. KOZACK: Okay, so, in terms of where we are with our support for countries, so first, I want to just emphasize that we're strongly committed to helping our member countries navigate the heightened uncertainty from the shock. It still is the case that most countries in the membership are still really looking to us for guidance on policy advice rather than on financing. And so, we've stepped up our engagement with member countries on policy advice. That said, we are in discussions with a number of countries that might need financial support and what are the appropriate modalities for providing that support.
You know, you mentioned Bangladesh, which has a new program request. We do have a few other countries which have existing programs where we are going to be proposing to our Executive Board that we augment or rephase. So, for example, I can tell -- mention four countries that where we're looking at that.
One is The Gambia. And in The Gambia, the authorities requested a 20 percent increase augmentation of the program, 20 percent of quota increase in augmentation, and a six-month extension of the program, and a rephasing of access. So that will be presented to the Executive Board.
In Burkina Faso, we reached a Staff-Level Agreement on augmentation of access under the ECF of $51 million, and that's in part to as a result of a higher balance of payments need because of higher fertilizer costs.
In Ethiopia, there we will propose to our Executive Board a rephasing of the disbursements. So, the proposal is to bring forward about $200 million to this year to help address the impact of the war in the Middle East.
And in Malawi, we had already started discussions on a new fund-supported program, but we accelerated those discussions because of the shock. And so, we will aim to hopefully have news on Malawi soon.
I know you had your hand up, and then I'll go to Kemi. Then I'm going to go online for a little bit.
QUESTIONER: I wanted to ask some questions on countries in Latin America. First, on Venezuela. A team of Venezuelan authorities met with MD Georgieva last week. I would like to know if you can provide a larger readout on that meeting, specifically if the authorities have requested any assistance to the IMF on a debt sustainability analysis? As we know, they are working on a DSA by their own means with their financial advisors. But it will be good to know, considering how big Venezuela's debt is and the various creditors they have, if they've requested any assistance on the IMF, or it's too soon to tell right now. And any update that you can provide on talks with the government on an EFF program request from Bolivia? We know there was a mission last week in the country. Thank you so much.
QUESTIONER: Thanks, Julie. . Picking up on Venezuela, I actually wanted to ask you, too, regarding that meeting that happened. How meaningful is it on the whole technical and legal sequence in order for the country to have full access again to the Fund’s instruments?
MS. KOZACK: Anyone online wants to come in on Bolivia or Venezuela? Okay, let me take these. I'll start with Venezuela.
So, on May 30th, just a few days ago, Managing Director Kristalina Georgieva met with Venezuela's Vice President for Economic Affairs, Calixto Ortega Sánchez. They met here at the IMF Headquarters. So, they discussed how the IMF can support Venezuela's efforts to strengthen macroeconomic stability, and this included a path to holding an Article IV Consultation. The discussions centered on how the IMF can support the authorities' priorities and areas where the Fund can provide immediate support through capacity development. So, there's sort of -- so there's the immediate leg, which is the capacity development, and the discussions focused on the path toward an Article IV.
So, on capacity development, what was discussed were some technical assistance priorities. And there were a few areas that were the -- where the discussions focused. One was on fiscal management, the other was on strengthening the monetary policy framework or the monetary framework, and the third was on improving macroeconomic statistics. And the agreement at the end of the meeting is that the authorities and IMF staff will continue working to deepen this kind of technical engagement and look to really provide technical assistance in the near term.
On the debt -- on the DSA, the Debt Sustainability Assessment, the Fund is not yet involved in those discussions on the debt restructuring.
Now, I'm going to go online for a little bit, and then I'm going to come back to the room. I understand you have questions on Egypt, Noor?
QUESTIONER: On Egypt and Iraq, Julie.
MS. KOZACK: Okay.
QUESTIONER: On Iraq, I would like to ask if you can confirm that talks are currently advancing, specifically regarding the Rapid Financing Instrument for Immediate Relief, and what's the estimated amount of emergency funding that Iraq is currently requesting for bridging the financing gap? And will any forthcoming program attach structural benchmarks or any strict conditions when it comes to accelerating domestic energy infrastructure and reducing external dependencies? That's on Iraq.
And on Egypt, I would like to ask if we know when the second revision for the Resilience and Sustainability Fund for Egypt will be? When will the second tranche be coming? And a comment about Egypt's climate yesterday, he said that in a press conference that Egypt will not renew its program with the IMF. What is your comment on that? And one last thing on Egypt, if you allow me, Julie. Last time in last month's press conference, I asked about the IMF's assessment of the Financial Services Sector in Egypt, especially that there has been a lot of discussion recently internally about the sustainability and the efficacy of this sector, competing with the traditional banking sector. Thank you, Julie.
QUESTIONER: Hi Julie. At the previous briefing, you mentioned that Egypt Seventh Review could be completed over the summer. Given the ongoing discussion with the authorities, does the IMF still expect to reach the Staff-Level Agreement within that timeframe? And when could the review be brought to the Executive Board? Also, are there any outstanding policy issues that still need to be resolved before the Staff-Level Agreement can be finalized? Thank you.
MS. KOZACK: Okay, thanks. If nothing else, on Egypt, let me go ahead and answer this.
So, what I can say on Egypt is that we had a staff, our staff team visited Cairo in May for the Seventh Review under the EFF and the Second Review under the RSF. The discussions focused on a few things: the authorities' response to the war in the Middle East, including the policy package that they put in place, and as well as on progress with structural reforms. So, it focused on their response to the war as well as the kind of program-related issues on policies and reforms. The authorities did put in place a package to sustain macroeconomic stability, preserve buffers, and reduce vulnerabilities by maintaining a flexible exchange rate regime, ensuring an appropriate tight monetary policy to bring down inflation, and to continue fiscal consolidation to strengthen debt sustainability and reduce financing needs. And the program that we have with Egypt also focuses on enhancing the social safety net to protect the most vulnerable. Accelerating structural reforms are really focused on reducing the state's footprint and strengthening governance and transparency and ensuring a level playing field. So, this is really the structural reform agenda that we're supporting under the program. Good progress was made during the mission. Discussions are continuing virtually toward a Staff-Level Agreement, and the view is that we still will aim to hold the board meeting this summer.
On, I think, Noor, on your question on the Financial Services Sector, I don't have much to say other than to just reiterate that under the program, the structural reforms that we're supporting are really focused on reducing the state's economic footprint. There will be an updated state ownership policy that is expected to be published soon, and that policy -- that will be a policy by the Egyptian authorities. And the goal is to provide a strategic vision for the state's role across different sectors and to serve as a framework to advance reforms to reduce the state's footprint and promote more private sector participation in the Egyptian economy.
And then on Iraq, I'll be very brief just to say that we welcome the formation of the new government, and we look forward to engaging with the new government and to discussing with them how the Fund can best support the country at this critical time for the country.
Let's go back online.
QUESTIONER: Thank you. I have a question regarding Senegal. As an IMF team heads here next week, what are the main issues the Fund expects to focus on in talks with the new government? And more specifically, if debt treatment options are part of the conversation, has the IMF communicated anything to authorities on whether a debt restructuring would be required under the Fund's baseline assessment? Thank you.
QUESTIONER: Sure. Thanks a lot. One other thing, I guess I just wanted to ask directly whether the decision not to participate in the government of Mr. Sonko -- there are a lot of -- there's a lot of reporting saying that this is going to put the program at risk or change things for the IMF. If you could say anything on that. And I wanted to -- I'd asked Tobias Adrian when I was at the Spring Meetings about these AI models that seem to be creating a lot of dangers for financial institutions. Has the IMF done any more work? What work is it doing on advising governments on whether it can get -- they can get advance copies of these models? What -- there's a big dispute here. There's an executive order; there's a bill in Congress. But what's the IMF's current thinking on dangers posed by frontier models to the financial system, if you can say? Thanks a lot.
MS. KOZACK: Sure. Any other questions on Senegal?
QUESTIONER: I wondered if you were able to offer us any information about how the IMF is forming views on total return swap transactions generally for sovereign issuers, but also specifically in the case of Senegal.
MS. KOZACK: Okay, so, on Senegal, what I can say here is that, you know, we remain engaged with the Senegalese authorities on their request for a program. An IMF team is scheduled to visit Senegal during the week of June 15th to continue technical discussions with the authorities. These technical discussions are aimed at reaching a shared understanding on the macroeconomic outlook, on Senegal's financing needs, and on its reform priorities. And all of these are ultimately going to be needed to address Senegal's significant debt vulnerabilities. So, on Senegal, I'm going to leave it at that. And we will hopefully then have -- communicate more after the team has its visit. And I'm going to refrain from commenting on the domestic political situation in Senegal.
On your second question on AI models and financial stability, I'll refer you to and the team can share with you a blog that Tobias Adrian, our financial counselor, put out in the last couple of weeks, exactly on this issue of how new AI models may have an impact on financial stability. So, we are doing work on this. We have put out some preliminary work, and of course, more work is underway, including on looking across our entire membership at how AI models may affect different groups of countries which have different types of financial systems at different levels of sophistication.
In the blog, it talks very much about the role of regulators and supervisors in stepping in now to understand and start to understand the financial stability risks or concerns or implications that these new AI models may pose to their financial systems. So, I think the first step is really for we, the IMF, but also regulators in the financial system, to really understand exactly the kind of technological infrastructure that banking systems are using and to begin to assess potential vulnerabilities. But I would refer you to that very interesting blog that was put out.
Let me go online for we have time for a question on Sri Lanka, and then we will wrap up.
QUESTIONER: Thank you very much. I have a follow-up question on Ethiopia. A report came out yesterday on the latest mission visit to Ethiopia. The report notes progress on debt restructuring and the IMF reform program. What are the biggest risks that could derail the program, and what remains the biggest obstacle to debt restructuring? And the other question on Ethiopia, from two to three years from now, what does success look like for the Ethiopia program? What should businesses and citizens expect to be able to do that they are not able to do right now?
And the other question is what is obvious. We have Ebola on the continent right now. Could you talk -- could you provide any updates on the Fund engagement with DRC, Uganda, Sudan? And do you see any potential economic fallout from the current Ebola outbreak for the countries and the region? I have another one, but I will, because of time, I will follow up by email.
MS. KOZACK: Great. Thanks, please come in.
QUESTIONER: The IMF has repeatedly recommended unified multiple exchange rates for eliminating the Central Bank's foreign currency interventions, but the parallel market premium still is at 20 percent, and inflation is double digits. And what is the -- what will be -- will the Fifth Review include the performance condition requiring the National Bank to cease all non-auctioned foreign currency allocation by a specific date?
And my second question is, as Ethiopia is removing the fuel subsidy and tightening the fiscal policy to meet the IMF targets, what are the specific goals, protection measures, and compensatory spending with the government in place to prevent the poverty among the low-income households? And will the IMF include a minimum social spending floor as a performance criterion in the review?
And lastly, I would love to know, the Fourth Review and other reviews have identified a few missing points. One thing is that Ethiopian investment holding should have a consolidated report, an audit report, in the National Bank's foreign currency interventions outside auctions and fuel subsidies should be removed. These were the IMF recommendations on the Fifth Review. So, what are the concrete deadlines to enforce these mechanisms, and will this include being in the Fifth Review? Thank you very much.
MS. KOZACK: Thanks very much.
So, on Ethiopia. We, our team, and the Ethiopian authorities reached a Staff-Level Agreement on the Fifth Review under the ECF. We've talked already about the augmentation for Ethiopia of to -- sorry, not augmentation, rephasing. We're rephasing the disbursements to bring forward $200 million under the program to help Ethiopia deal with the immediate impact of the war.
On the issue of debt what we are doing is to encourage all of the parties to come together to look for, you know, an appropriate resolution and solution to, to, to the issue. Because it's an important step for Ethiopia to be able to kind of restore debt sustainability durably. And so that's, I mean, basically, this is what we're really encouraging the parties to come together and look for a proposal that all parties will find suitable.
On some of the more specific questions on Ethiopia, I'd say on the exchange rate regime, what I can say is that the authorities have taken some important steps toward modernizing their monetary and exchange rate framework, and this has supported a reduction in the parallel market premium in, in recent months. A lot of the actions that we've been supporting in this area have focused on strengthening transparency and market functioning. It's included, for example, launching an FX trading platform, eliminating surrender requirements on services exports, and easing retail transaction limits. So, I would say in Ethiopia, like, as, you know, the program is supporting a move toward a more modern monetary and exchange framework, there's a lot of kind of detailed steps and actions that are being taken to kind of move it to a more market-based way of functioning.
On the question about the fuel subsidies, there what I can say is that in Ethiopia -- and this holds for many countries that are undertaking subsidy reforms -- our advice is consistent and clear that measures should be put in place to protect vulnerable households from the impact of higher prices. In Ethiopia specifically, the program includes a target for government contributions to the Productive Safety Net Program. That's their kind of social -- the part of their social safety net that aims to protect vulnerable households. And over the coming years, the government intends to expand this program to all regions, some of which are quite rural.
I think, on your question about what success looks like, I'd say that's really more of a question, I think, for the authorities and the people of Ethiopia. Do they feel that the program has delivered for them? I think from our perspective, we see our programs really aiming to restore macroeconomic stability and financial stability in the country. That is the foundation for strong and sustained growth. It is not the only condition for strong and sustained growth, but our contribution as an organization is really to create that foundation for macroeconomic stability to enable then the government, the people, households, and firms to build on that foundation to create the economy that they wish for, that fulfills their hopes and lifts their living standards.
And then finally, on the question on Ebola. So, on Ebola, we are obviously monitoring the situation, what's happening with the outbreak, but also the potential economic impacts of the outbreak, particularly in DRC, Uganda, and South Sudan. The health crisis is obviously a very serious concern. It is disrupting economic activity in the kind of affected areas. But when we look at the broader macroeconomy in the countries, it's too soon to really assess what -- whether there's going to be broader macroeconomic consequences at the national or regional level. We are closely engaged with the authorities in the affected countries, and we're also engaging with other development partners to better understand the evolving situation and how we can be most supportive. We, of course, stand ready to support the affected countries as needed.
QUESTIONER: So, I just wanted to be clear. They haven't -- sorry, very quickly -- they haven't reached out for any emergency assistance?
MS. KOZACK: We’ve received no requests for emergency financing.
QUESTIONER: Thank you.
MS. KOZACK: And with this, I am going to wrap up this Press Briefing. So, this concludes for today. Thank you all very much for your participation.
As a reminder, the briefing is embargoed until 11:00 a.m. Eastern time in the United States. The transcript, as always, will be available later on our website, IMF.org. And I know, again, like always, there are many of you we did not have a chance to get to your questions. Please do reach out to the media team at media@imf.org or via the Press Center, and we will follow up with you bilaterally.
Thank you very much and wishing everyone a wonderful rest of your day.
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