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Transcript of a Press Briefing by Thomas Dawson|
External Relations Department
International Monetary Fund
Wednesday, March 28, 2001
MR. DAWSON: Welcome to another one of our regular press briefings. We'll be posting the IMF management's public engagement schedule on the website Friday afternoon, as usual. But for planning purposes, I would like for you all to note that the Managing Director will be participating on Monday, April 2nd, in a German Parliamentary Forum in Berlin with Jim Wolfensohn of the World Bank on the challenges of globalization and the roles of the Fund and the Bank. The press office can give you details on the time and place, but it is a public event, and I think will be of interest to a number of you.
We'll let you know about prepared remarks, and it is expected, though, that the focus of the event will be a question-and-answer session, with the introductory remarks being relatively brief. The Managing Director will also be participating in next week's Western Hemisphere Financial Ministerial meeting in Toronto. That'll be on Wednesday, April 4th, and then he'll return to Washington from there.
Now to your questions.
QUESTIONER: After meeting with U.S. and IMF officials the other day, the new Turkish Economic Minister said the Turkish Parliament should approve some 15 reform laws and legal amendments in two or three weeks to get Western support for the new economic program. And today, the Turkish Prime Minister said it is physically impossible to approve all 15 legislations in such a short time. What exactly do you want Turkey to do? What would be enough for you, basically? Would you like Turkey to show its determination or what is the criteria?
MR. DAWSON: Well, I think you're contrasting a statement by the Minister and the Prime Minister and not a statement of the Fund, so it's a little hard for me to get in and answer what the difference between the two is.
We did indicate, coming out of the meeting that Mr. Dervis had with the Manager Director, that we did agree with the Turkish authorities, that it is critical for Turkey to establish a convincing program. The framework for that program is laid out in the March 19th agreement; that is in the Framework Agreement, which provides the road map. I don't think it's appropriate at this time to be talking about how many bills have to be passed by what period of time. It's a process, and I understand Mr. Dervis will be returning to Turkey tomorrow, and then they will see how they continue to flesh out their program, and put more details in it and get legislation.
So there's no way I'm going to put myself in comparing those two parts of the question because they didn't actually directly involve us.
QUESTIONER: Mr. Dervis was saying that he's hoping to wrap this up in a couple of weeks. Is there a plan to send a mission there? I mean, what logistically needs to happen within the next two weeks if everything goes as expected?
MR. DAWSON: As I indicated, he will be heading back to Turkey tomorrow, and then as they work out the program, assuming that they make good progress, there will be a point at which a mission goes. That's correct. But the next step is them working out more of the details of their program. Remember, we do have a resident representative there, so there is continuing contact on the ground. And precisely when a mission would be sent, I cannot identify. It is a time frame. Whether it is two weeks or a little bit more, I don't know, I mean, in terms of their own deadline. But the next step after they've worked out the program, would be for a mission to go out, and that was anticipated back when the Framework Agreement was signed.
QUESTIONER: If I could follow-up again on Turkey. Mr. Dervis was pretty forthright in saying that Turkey needs $10 to $12 billion for their financing this year. Has that been part of your discussions up until now with Turkey, and what is your analysis of how much they need in extra financing this year?
MR. DAWSON: We wouldn't be in a position to come up with a financing gap, if that's what you want to call that number, until we get more details of the program. And the size of any financing need, whether it be internal or external, depends on the strength of the program and the details of the program, and those are not yet fleshed out. That's precisely why, in the answer to the previous question, I indicated the next step is for the government to formulate the program, help translate it into fiscal terms, and then we see what that implies for financing.
QUESTIONER: Last night, the new Minister of the Economy in Argentina, Domingo Cavallo, presented his new economic program. What do you think about it, is the first question.
And the second question, the Minister, on Sunday, in a statement in the Cardenas paper, said that negotiations with the IMF is irrelevant. What do you think about that?
MR. DAWSON: Well, I think you've heard this before from the Managing Director, and you've heard this I think from me is that you know our business is to support countries' programs. And the Minister and the government are working to develop what is a strong program, and we are working with them, and they've made it clear that they want to work with us and are interested in continuing the program that we have. So I think I would characterize that as a comment about the need for strong ownership of the program and that I think we can certainly agree with.
In terms of what was announced last night, we have indicated, and I think we can probably provide the text of an interview with Claudio Loser that he gave the day before yesterday, in terms of initial reactions to the program. It was to CNN en Espanol. Actually, I just noticed here, it won't be published until tomorrow, so sorry about that.
But, clearly, we're looking at the program, and it looks like he's presented a strong program and is making pretty clear progress in getting it through Congress, and that's sort of where the action should be at this point. But we are definitely acting in the context of a program that will be continuing with the Fund.
QUESTIONER: Do we have to wait until tomorrow for Loser's interview with CNN en Espanol?
MR. DAWSON: I don't think we can release it at this point, but we will release it when it comes out. It is basically indicating that we're working with them and has some commentary on some aspects of it, but it's quite positive.
QUESTIONER: My question is that last week, when Loser was in Argentina, he negotiated with Lopez Murphy a program which basically was designed to address the fiscal problems because Argentina, as we said earlier, will not meet the targets on the first quarter. And you said before that Argentina needed to take measures so as to meet those targets. This program of Cavallo does not contemplate any type of adjustment like the one by Lopez Murphy did.
I was wondering if you have any concern, from the fiscal side, with the new program or do you think that with this new tax Argentina will be able to meet its annual targets?
MR. DAWSON: My understanding is that there is convergence between the objectives of the program and Argentine law, in terms of the fiscal responsibility law. So, once the program goes through, and all of the details aren't there and the actions haven't been taken, we just at that point see what the fiscal implication is.
But there certainly is a difference between the two approaches, but I don't think it's inconsistent with where we would wind up in terms of the ultimate implications for the program and the deficit.
QUESTIONER: I wanted to know if the program would be enough to have the waiver for the first trimester objectives, fiscal objectives, that we're not going to comply, and if we are going to be able to get the $1.3 billion I think in May?
MR. DAWSON: It's way too early to deal with that. We need to see the program before anyone can talk about waivers or anything.
QUESTION: Tom, would you please elaborate a bit on Mr. Köhler's and Mr. Wolfensohn's appearance in Berlin, and will it be a hearing or what will it be?
MR. DAWSON: No, it's not a hearing. It's a session organized by I think one or more committees of the German Parliament. It is an appearance. There was a somewhat similar appearance by the Managing Director to a group of the European Parliament last year. This is a joint appearance. It was first conceived actually prior to the annual meeting, and there was hope that maybe they could do it right after the annual meeting, but for scheduling and logistical reasons they were not able to.
But as I say, it is a public forum, and we are increasingly getting requests of this sort from Parliaments for appearances of the Managing Director. In this case, it was conceived of as a joint event, but in a legal sense, it's not a hearing.
QUESTIONER: I have two questions which are not related. The first one is about Turkey. How much money exactly is left under the program that was accepted last December, and is that money still available, even if the program is now dead pretty much?
MR. DAWSON: Well, approximately $6 billion. The program, in a time sense, remains active, but clearly it is off-track in a program sense. So it is not available, in a drawing sense of the word, but the expectation would be, as the program is put together, that the $6 billion would continue to be available once a new program is adopted by the Turks and reviewed by the Fund.
QUESTIONER: Let's say Turkey would be in dire need of money in the next three weeks, that money won't be available then?
MR. DAWSON: I would wonder about the premise of the question with a floating exchange rate and $20 billion of reserves.
QUESTIONER: And the second question is about Mr. Mussa's comments two days ago about the fact that the European Central Bank would be in a good position to lower its rate. Was he expressing the IMF views or his own views? He was speaking at the National Association of Business Economists.
MR. DAWSON: I'd say he was expressing his personal views, but I think that it is a view that is widely shared. The Fund, as an institution, doesn't have a position on that at this point. You could expect that this issue may come up as we get closer to the spring meetings, and we have the WEO coming out, as well as the MD's press conference and so on at that time.
QUESTIONER: A question on Russia. Do you have any comment on the pronouncements yesterday, and I have some technical details that I wanted to check up on, but if we could start with a general comment, was that something completely out of the blue, unexpected for you? What's your reaction?
MR. DAWSON: To?
QUESTIONER: To the announcement that Russia will not be seeking a new program with the IMF.
MR. DAWSON: Well, let's keep this in a particular context. It has, for some time, been envisioned that this would be a precautionary arrangement, not an arrangement that expected any kinds of drawings. The direction which it is going now is for a relationship that would still have active dialogue in the form of monitoring and so on, but it is not a program with conditionality. There still, presumably, could well be targets that the authorities brought up on their own.
So I think, yes, it's a shift from where it was going before, but it is not that big a shift to go from a precautionary arrangement to some form of a monitoring arrangement.
QUESTIONER: Are you satisfied with the Russian--well, do you understand clearly the Russian position? Because there was some great pronouncements in Moscow. For instance, the Prime Minister said, who is not in Moscow, who is traveling, he said, "I have not sent any formal notification to the IMF," for whatever reasons, and most of the pronouncements were made by the Deputy Prime Minister and Minister of Finance.
So are you satisfied that Moscow is speaking with one voice on this?
MR. DAWSON: Certainly, we were informed, the Fund was informed by the government, through the established channels, prior to any of this being public, yes.
QUESTIONER: And there was a suggestion that there is a mission, IMF mission in Moscow at this time. I think that's wrong, right? There is no mission.
MR. DAWSON: I don't believe there is, no.
QUESTIONER: Okay. And just to restate again, the IMF would be comfortable with an arrangement where the Russians do not have a formal program, but have some objectives, and benchmarks, and the IMF would monitor those, say, once--
MR. DAWSON: Yes. Again, the Fund's relationship with countries goes beyond simply lending money, and we will continue to be engaged with them. There will be regular missions. There will be continuing technical assistance, and I think it will be a relationship where we will be in close contact with each other, but just without that extra structure of a formal program.
QUESTIONER: And if I may, one last thing on a different subject. The Belarussian Government in Minsk was saying recently that they seem to be seeing progress or at least a possibility of progress with the IMF. What was your take on that? Where is that relationship headed?
MR. DAWSON: I'll have to get back to you on that. I do recall recently having seen some reference to something like that, but I think I would have to get Kathleen to get back to you.
QUESTIONER: Going back to Mr. Köhler's visit to Berlin on Monday, will he actually have an opportunity to meet with Mr. Schröder or any other high-ranking German officials, particularly to discuss the Turkey crisis?
MR. DAWSON: I'm not aware of anything that is scheduled, but it would not be unusual, when he's visiting the capital, to be meeting with senior officials. But as I indicated, in response to the follow-up question, this is a trip that was planned for some time, and this happened to be the particular timing, so the trip is not in any way associated with that.
QUESTION: Mr. Mussa sort of hit the highlights of the WEO the other day. I was wondering what we might expect from the spring meeting in terms of new emphasis or any major areas? What are you looking for at the spring meeting?
MR. DAWSON: Well, I think he did hit the highlights, and as I indicated in response to the earlier question, he was giving his views on it. I think the WEO forecasts do continue to be updated so that when the WEO Report is published on April 26th, I think you will have that, and I think it's going to be, as much as we can, in real time.
One of our difficulties is that the production process of the WEO requires drafts to be prepared, and there gets to be a little, both a lag problem and, in some sense, a lack of suspense. I shouldn't quite put it this way, but this year's WEO, there's a particular distinction--as you may recall, the last couple of years we've had individual governments publishing the WEO on the website well before the embargo. This year, we had a new approach taken by a particular news service, who managed to publish excerpts of the WEO before 99.9 percent of the staff or EDs had even seen it. That is quite a bit of entrepreneurship. But don't worry, we'll change the numbers so it'll be wrong.
QUESTIONER: I am confused. When the former Minister of the Economy Argentina, Lopez Murphy, presented his new program two weeks ago, I received in my computer an e-mail with the statement Mr. Loser's support of his plan. But last week, Mr. Cavallo presented two programs, but I don't know what the IMF thinks about Cavallo. And Cavallo said on Sunday that the negotiations with the IMF are irrelevant. What happened in the relationship between Cavallo and the IMF?
MR. DAWSON: I think we have been in regular contact with Mr. Cavallo. Our relationships with the government are quite good. We're in touch with them at varying levels, and that particular--the earlier statement that you referred to was in an earlier time and situation. And at this point, the government, quite appropriately, is putting together its program. And if you compare it to that particular point in time, it's a different stage. But the relationship is quite a good one and, frankly, I don't think there's any issue there.
QUESTIONER: Two different countries, if we could. First, Jakarta has said that they're hoping for an IMF mission in April. To keep them happy, is that possible? If you could just touch on that.
And, also, Ecuador is voting this week on the key measure of increasing its value-added tax to 15 percent. I was wondering how that's going to affect the possible next disbursement, and if they can't get that through Parliament, how does that fit with the new conditionality rules, where you can be flexible, and is there any chance you can be flexible with Ecuador if they don't get that piece of legislation through?
MR. DAWSON: Okay. On Indonesia, as compared with the last time I briefed, I think it would be fair to say there has been progress on a number of the outstanding issues, but we are not yet at a point in terms of having set a time for sending a mission. When that does happen, you can be sure we will let you know. Whereas, in my last briefing I said there's no change from the previous situation, this time I am saying there certainly has been progress, but we're not yet at a point--
On the issues that I have identified. They are working--let me just see. They've issued a number of decrees, finalized decrees in the area of decentralization. Parliament has approved privatization of shares of a couple of the additional banks, and we've been making progress on the area of the debt restructuring principles of IBRA. Is that enough?
MR. DAWSON: On Ecuador, we did reach an ad referendum agreement with the authorities on the program for 2001, which could be the basis for concluding the review, but as I think you mentioned, there are outstanding issues. One of the issues is, indeed, congressional approval of a tax reform, consistent with the objectives of the program and implementation of the measures needed to strengthen the banking system. You might want to repeat the particular sort of circumstance that you were--
QUESTIONER: I was just wondering with this new conditionality policies that you're developing, is there wiggle room here if, for some reason, they can't get this particular value-added tax through Parliament that they can maybe try and boost tax revenues in some other way or--
MR. DAWSON: We would have to look at that, but clearly there are targets in there, and this is the government's program, and that's what they are trying to push through. When we get to the hypotheticals, we deal with hypotheticals when they become realities.
But part of your question was on the flexibility of conditionality. The flexibility is reflected when the program is designed. It doesn't get flexible after it's agreed to.
QUESTIONER: Can you summarize/characterize your relationship with Uzbekistan now that you've withdrawn your resident representative, and what was it about Uzbekistan's approach to reforms that you didn't like?
MR. DAWSON: Well, for those of you who haven't been following Uzbekistan, the Fund did announce that with the expiration of the assignment of the current resident representative to Uzbekistan, he will not be replaced. We will be maintaining an office there with local staff. But the representative won't be replaced.
There are a number of issues that have been of concern to us in Uzbekistan. In the area of current account convertibility, multiple exchange rates, and in particular the exchange rate system has been part of our package of recommendations, and there just has not been any progress. And, indeed, the latest news in that area is that the liberalization in the exchange rate regime has been postponed for three to five years.
There are other areas in which there are problems, and whether it's a state order system for cotton and wheat, an enterprise sector that's heavily dominated by large firms, a control- as opposed to market-oriented trade regime, poorly developed financial system and weakness in collecting and reporting data.
So it's a wide range. This is not a completely unprecedented sort of move. A similar measure was taken in other countries in the region. The Wall Street Journal identified Turkmenistan as one I think about a year and a half or two years ago. And other times we have reduced presence in countries or shifted to a situation where a res rep may cover more than one country. So this does happen, and it can be reversed if it looks like it's a good use of our scarce resources.
QUESTIONER: I just wanted to know when the mission is going to Argentina. I'm told that perhaps they were going to go a little bit earlier. The schedule I think is for the end of April. Is it on schedule? Is it going to be earlier? Do you have anything on that?
MR. DAWSON: I still have it as being the latter part of April, but we'll check to see whether there's anything new on that.
QUESTIONER: Again, on Argentina, if the mission goes at the end of April, what is the earliest point that a disbursement could come, and is it your assessment that Argentina has the ability to finance itself through the time of the next disbursement?
MR. DAWSON: When a program might or disbursements might resume after a mission, it would depend on, assuming that we're in agreement. It typically takes three/four weeks, but even that would be kind of pushing it a bit. Whether the state of financing or needs of the authorities, I think I would just direct you to the statements that Minister Cavallo, and Daniel Marx and others have been making, which is indicating that they believe they've got their financing in the near term in reasonably good shape. But they've been pretty explicit. I've seen Daniel quoted a number of times on that, and I'd just point you in his direction.
QUESTIONER: Could I just follow up?
MR. DAWSON: Daniel Marx is pretty reliable and authoritative on that.
QUESTIONER: So you're saying that you share their assessment.
MR. DAWSON: That's certainly what it looks like at this point, yes.
QUESTIONER: So it means that it would be like the end of May, the disbursement, more or less?
MR. DAWSON: I don't know. It all depends on when the mission goes and when the program is adopted, but I was just reminding people that there's sort of a normal pace. You know, how long it takes after a normal mission situation.
QUESTIONER: Four weeks.
MR. DAWSON: Three/four weeks, and even that's pushing it, but it can be done.
QUESTIONER: What are the next expected steps in the relations with Ukraine? Are you waiting for them to sort out their differences internally or maybe a mission is planned? What is to be expected?
MR. DAWSON:We did have the mission here at the beginning of the month, and we were unable to conclude the fifth review. We still think that while some of the end-December targets, monetary and fiscal, had been met, there's clear need for further progress in other areas before the review can be completed. And this is in the area of tax arrears, energy sector/financial sector reforms, and our favorite issue, the sunflower seed export tax. So, I think basically it's waiting to see how that develops. There's nothing scheduled at this point.
QUESTIONER: Pakistan says that they expect to get a disbursement this week. Is that true?
MR. DAWSON: I think we expect that the Board will meet on Pakistan on Friday. That is the way it's presently scheduled. So we'll have an announcement for you after that if this is what happens. But it is scheduled for Friday. I think the program is for about maybe $130/140 million, a little over 100 million SDR.
Is that it? Somebody's tape recorder just ran out so we might as well end it. Thanks a lot.
[End of Press Briefing.]
IMF EXTERNAL RELATIONS DEPARTMENT