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Transcript of a Press Briefing by Thomas Dawson
External Relations Department
International Monetary Fund
Wednesday, October 17, 2001
View this press conference using Media Player
MR. DAWSON: Good morning, everyone. I am Tom Dawson, Director of External Relations at the IMF. This is another one of our regular press briefings. I do not have any special announcements for today, so we can proceed straight to questions.
QUESTION: I just wanted to know if you had any comment on the information in the Financial Times this morning about the IMFC meeting.
MR. DAWSON: The Financial Times was quite busy today uncovering Fund-related issues. I think it should not be any particular news that we have been looking and are looking at having an IMFC meeting as soon as it can be arranged, and I think they are on the right track, even though they don't seem to have too many specifics. We would hope to have an announcement within the next week or so about a meeting, and we do expect that it would be held before Christmas.
It's simply a matter of making all the arrangements, because this is obviously a meeting done on a much shorter time frame than normal.
QUESTION: Will the IMF try to make sure that it does not happen during the WTO meeting?
MR. DAWSON: It certainly will be coordinated with that, yes.
QUESTION: Can you be specific as to continent?
MR. DAWSON: They do not have yet a time or a place. They basically indicated, you know, that it's about to be set up, and that's--
QUESTION: But at least for planning purposes--
MR. DAWSON: You'll have enough--you'll have enough warning to easily be able to get to wherever you're going--assuming you wish to attend. The expectation is that there would be arrangements for the press. So it's not going to be held in a bunker.
QUESTION: The Russian questions. First, do you have anything new on the timing of the rescheduled mission?
Second, if you have any general observations on the results of the Managing Director's visit to Russia, and specifically, as the Russians indicated during that visit that they will be repaying some of the debts early, can you give us any details as to how that will work?
MR. DAWSON: In terms of the rescheduled mission, we are expecting the mission in the near future, and we will make it known when it takes place. I think it's not surprising that we are not announcing things quite as far in advance in some cases as we have, because schedules are changing.
In terms of the visit, I think the Managing Director summed it up reasonably well in his opening statement and responses to questions at the interview--or the press conference given at the conclusion of his visit or the morning of the last day of his visit.
Regarding the early repayment of some of the purchases by Russia, they did indeed announce that, and it is an acceleration of a group of the payments that otherwise might have been due through the end of the year 2003 and will be paid a year or more earlier than originally scheduled.
I would note in broad numbers that we had a peak exposure to the Fund of a little more than $20 billion at one point. We are now down to about half that level, and the Russian prepayments are certainly welcome. Not unusual when a country has a strong balance of payments situation. There are other countries that have been making early repayments as well, and that will obviously help Fund liquidity.
And for those of you who have very long memories, you may remember that some two years ago the allegation was that all the Fund money had been stolen, lost, et cetera, et cetera. Well, someone seems to have found it, since more than half of it has been repaid.
QUESTION: What's happening with Turkey? Today the 2002 budget was being submitted to parliament. Is the IMF in agreement with the Turkish Government on major targets for next year, including the primary surplus and inflation rate? And, secondly, are you now considering additional funding for Turkey for next year?
MR. DAWSON: I think that what we are doing at this point is, you know, following closely and we've been involved in discussions with the government for the 2002 budget, which has the primary surplus target of 6, 6.5 percent, and that is something that we are agreed on, and I would say broadly speaking we are agreed on the other parameters as well.
I think it's a bit early to be talking about how financing gaps will be filled. On the other hand, it's not at all surprising that we are looking at scenarios of financing gaps, and just to review economics, international economics 101, financing gaps can be filled in a number of ways. They can be filled from policy measures. They can be increased or decreased by economic activity. They can be filled by domestic financing, by international financing of public, private, multilateral, and bilateral sources.
So I would say that a wide variety of options are being looked at, but it's not a situation at this point where we are filling in--we are passing out the United Way contribution sheet to be filled in.
QUESTION: Do you still expect the [inaudible] review to be completed by the end of--or it is this month?
MR. DAWSON: We are expecting to go ahead. We are basically on track for the review to go forward. The precise dates I am not certain on, but broadly speaking, if it slips a few days, that is possible, but there is no hitch as far as that goes.
QUESTION: This month.
MR. DAWSON: It is possible.
QUESTION: A follow-up and some questions. On Turkey, are you saying that you will not be ready during the next review to talk about expanded lending? This well may be a review of the existing program?
MR. DAWSON: Well, it is a review, but obviously we are looking at the year 2002. I cannot imagine that the review will not address those issues, we do not do reviews that do not also look at the next year.
QUESTION: I mean there will be no separate program decided on--
MR. DAWSON: That's not really the way we work. The program is an existing program that continues for a while.
QUESTION: The Minister had indicated that possibly new financing might--
MR. DAWSON: But that's all done in the context of a program and whether--whether there are changes to the programs and so on. But it's all done as part of that process that is at this point in time centered around the prospective review.
QUESTION: Are Fund guarantees part of the options that are being looked at for Turkey? Is that somewhat along the lines of what was promised for Argentina?
MR. DAWSON: I'm not aware of that, no.
QUESTION: Okay. And then on Pakistan, how much money can Pakistan qualify under, either a PRGF or a stand-by? And if the country opted to go to IDA-only lending and got a PRGF, would it then qualify for HIPC relief? Or is that being discussed?
MR. DAWSON: As far as the Pakistan program goes, as you know, they are basically concluding the existing stand-by. The plan for some time has been to move on toward a PRGF. That is the plan, and there has been no change in that plan or, actually, even in the timing of the plan.
I'm not qualified to talk about IDA. I think at this point the expectation is that what we are looking at is PRGF, not a continued stand-by--or not a new stand-by. And I think that's about it. Was there something else?
QUESTION: In the past, PRGF programs have been one of the pieces of the groundwork, you know, for making debt relief possible, and I want to know if debt relief is possible--
MR. DAWSON: You mean HIPC, HIPC debt relief ?
QUESTION: Or it doesn't have to be HIPC, but some kind--
MR. DAWSON: Well, no, certainly a PRGF would be necessary for another Paris Club operation, for example, but I have not heard HIPC in this regard. I certainly have seen some commentary about Paris Club because the debt situation for Pakistan is a significant consideration.
QUESTION: What stage are things at with Brazil at the moment? There is a lot of speculation in the financial markets that you may be talking to them again about some revisions or expansion or augmentation of their program.
MR. DAWSON: We are in constant contact with Brazil. A mission for the Article IV consultations and a first review of the program that was approved in September will be going to Brazil this week to discuss the recent developments and options for the future. I think that while these are not by any means routine times, this is, within the context of the times we are in, a routine visit, in a situation of obviously close monitoring but not where I expect any dramatic developments.
QUESTION: Moving on to Argentina, then, what is the status now? Can you comment on that? The bond swap that everyone has been waiting for as a good thing, is now seen as a bad thing, and it would lead to another debt downgrade. Is the IMF still supporting that, still helping Argentina in the planning with that?
MR. DAWSON: Well, the Argentine authorities are considering a number of options. The press speculation on a bond swap in the last couple days appears to be on the domestic side. But the Fund money that is available for acceleration of use in a debt deal is still there. I expect that the authorities will shortly announce details of what their domestic bond ideas are. At least that is what they have indicated.
I should also note that there was a report -- and I think I will confirm it before you ask -- that Thomas Reichmann, the Deputy Department Head and I guess mission leader for Argentina, is in Argentina for a short visit at the invitation of the authorities. I suspect it will only be for a couple days. He will then return, and we do have planned a mission to Argentina in the next couple of weeks that would be for the next review. The Argentines may be making some announcements on their debt swap, but we are on track for the planned mission that will be taking place in a couple of weeks.
QUESTION: You mentioned that the reports (?) domestic swap. Now, is the IMF money contingent on domestic or international swap?
MR. DAWSON: Well, you know, I think we would have to see what they come up with. But what I read about in the paper does not sound like it is something that would have them requesting Fund money. But they will have to make their decision and their announcement. It sounds like it is a different sort of a transaction.
Again, this is based on what I have read in the papers, because they have not done anything in a formal sense.
QUESTION: Just to follow up on Argentina, considering the way things have evolved now in Argentina, there's been renewed concerns about their debt payment situation and the recent election results. Does the Fund have any second thoughts about the recent actions it took in providing additional financing to Argentina? And do you think that Argentina is living up to and do you expect them to live up to the commitments they've made on the budget?
MR. DAWSON: The authorities remain absolutely committed to meeting the commitments under the program, and particularly with regard to the budget, to the so-called zero deficit package. It has obviously been and continues to be a difficult situation, but the authorities are committed and are working hard to achieve their goals, which I think have heavily focused on the fiscal side.
There were, of course, the elections that took place, but I don't think any particular surprises came out of that. So we continue in very close contact with them. They seem--they are committed to their program, but what is an obviously a difficult circumstance.
QUESTION: To what degree do you think that the current size of the Argentina program is one that meets the demands of the situation? Is there any look at accelerating disbursements, not size but the structure of the disbursements? Any look at either accelerating or expanding the size of the program at this point?
MR. DAWSON: I think that the targets are pretty clear under the zero deficit program. Given the nature of their exchange rate regime, it is clear how you get from here to there in terms of meeting the zero deficit targets gets them there. So the basic answer to that question is no, although I would qualify, just so no one is confused, there is an element in our program of the $3 billion which is potentially available to be accelerated if there is a debt deal. But that is in a different category, I think, than what you were asking about.
QUESTION: Just to follow up on that question about the debt deal. Would the $3 billion be available if the rating agency would declare Argentina in default?
MR. DAWSON: I do not know quite how to answer that question. We are not like a bank that lends under rating agency--
QUESTION: Okay. But there is no prerequisite attached to the $3 billion--
MR. DAWSON: No. The Fund makes its decisions. We do not have a cross-default clause with rating agencies.
QUESTION: In recent weeks, there has been an increasing call from the IMF about the CCL. Mr. Kohler mentioned it in his last statement about the economic global situation. And I was wondering if that call in some way could be accompanied with some kind of changes in the conditions on that particular credit line, because I remember, for example, some Mexican officials that mentioned that they had not been interested in that line because of the conditions. So you have been calling some countries to look at this credit line as a helpful, you know, tool in these times. Are you considering some changes in order to make it more attractive?
Also, I wonder if you have some kind of assessment about how many countries could apply to this credit line.
MR. DAWSON: As many countries could apply as are interested. As far as adaptations to the CCL, in the Mexican context it is clear that the Mexican authorities have indicated an interest in it. It is also clear that over the last several years--two to three years--that interest in CCL has been constrained by some of the conditions or perceptions attached to signing up for a CCL. And we continue to look at how to make the instrument more attractive, but I do not think-there is nothing particularly new in that regard.
We are in contact with a group of countries in that regard. We are not--I am not prepared to discuss which countries they are. Countries that are interested have--certainly can indicate if they wish that they are interested, and that is the category in which Mexico fits. So they have indicated an interest.
But as I think the statement by the Managing Director of about two weeks ago, ten days ago indicated, you know, we have a wide range of instruments, all of which are potentially available for the current situation. And we think that they can be used without any significant, you know, need--without any need for new facilities or need for real--for major changes.
QUESTION: Coming back to Argentina, if the Argentine authorities decided to extend the principal involved in this debt swap more broadly to creditors as a whole, and essentially informed them that they were going to have to make rather significant concessions in the value of their claims, would the Fund object? Would the Fund support such a thing? Would you rule out the Fund providing additional support to Argentina to help tide it over the obvious reaction that would likely follow, hopefully temporary in financial markets, would likely follow such a move?
MR. DAWSON: I think that is rather too hypothetical for me to answer. Sorry. The debt situation is significant, although by some measures in Argentina it is not as significant as in other countries. And we will continue to be in touch with them on a range of issues, including this. But your question premise is rather hypothetical, and I am not ready to go there at this point.
QUESTION: And if I can just follow up on Brazil and Turkey, just to wrap those two questions together, am I correct in interpreting your carefully worded responses to at least imply that you are by no means ruling out the possibility of substantial augmentation of both countries' programs? I mean, I know you are saying that you are not passing around United Way ...
MR. DAWSON: Pledge cards. We are having pledge cards this week. That is why it came to mind.
QUESTION: But you are not ruling out--
MR. DAWSON: But I am not ruling them in either. I think it is actually premature to be talking about that because in neither country are we at that point. In both of the countries, they are in programs in terms--I guess we are raising three, but in terms of Turkey and Argentina, but I guess it would apply to Brazil as well. They are in programs. They are--you know, we know what needs to be done, and the issue of increasing programs, accelerating, again, with the minor exception on Argentina, is simply not an issue that is on the table at this point.
QUESTION: Could you just tell us how we can fit your statement that it is premature to talk about new money for Turkey with statements from Kemal Dervis that he has asked you for money and statements that that money will be discussed and approved or disapproved by the IMF's Board before the end of this month ?
MR. DAWSON: The authorities have clearly indicated a desire for additional support, but we are still looking at what the scenario is and, you know, what the implications are.
QUESTION: What exactly--
MR. DAWSON: I am not addressing what Mr. Dervis may have said. I am addressing what the Fund is doing at this point. And, you know, he can be entirely accurate because there are two sides to transactions.
QUESTION: But what is premature? Because you pretty much just said there that he may have asked for funds and you may--
MR. DAWSON: No, no. I am just saying that what he said does not contradict what I said, is what I am saying.
QUESTION: So he has asked for fund--
MR. DAWSON: I did not say that. I just said what he said is not--
QUESTION: I'm not saying he said it.
MR. DAWSON: Okay. All right.
QUESTION: He is saying that he has asked for funds, and he has said that he is discussing it and that you will have your answer by the end of the month. So what--
MR. DAWSON: We are not there at this point.
QUESTION: Not where?
MR. DAWSON: We are not at a point where we are describing what the next steps will be. We are in a process that goes toward the review, and the review of the program will be the point at which we discuss that.
QUESTION: You say you are not at that point. When do you expect to be at that point?
MR. DAWSON: When we get to that point. But, obviously, it does fit in, as your earlier question said. It fits into the process of the reviews. So as we get closer to the review, that is the point at which it comes up.
Look, most of you have covered this for a long time. You will see lots and lots of stories on what people are asking for. And that is separate from what necessarily happens, and the timing is key to what the timing of the program is. And in the case of Turkey, we have a program that has a particular timing for a review. And then the review takes place, that is the point at which that will come. And it is likely-I am not saying you have to wait for the Board meeting. It is likely that, in fact, the nature of what will be discussed will be quite apparent before the Board meeting. But we are not there yet.
QUESTION: On Argentina, the Argentine press is reporting that Reichmann's visit, which I guess you are saying is not officially a mission, will discuss dollarization. So I was wondering if you could say whether that is the topic at hand and whether the IMF at this point thinks dollarization might be a positive thing for Argentina. Also, do you think that the local debt swap may make it easier to carry out an international debt swap in Argentina?
MR. DAWSON: I have no comment on the latter part. And we don't know what the domestic operation is, so I can't talk about what the implications internationally would be, and so it would be speculation.
On the other part of your question, which really goes to what the purpose of the visit is, please remember that this is at the request of the authorities. The authorities are going to be talking with Mr. Reichmann about some ideas, some thoughts, plans they have, whether it is on the exchange rate regime, whether it is on the debt swap, whether it is on zero deficit. I suspect they are all on the table, and I have no particular reason to steer you in one particular direction as to what the subject is. But it is, as I say, expected to be a relatively short visit.
QUESTION: And dollarization--
MR. DAWSON: May, may not. I would not focus on that because I do not think that this is the focus of the trip. But almost anything can come up because he is going at their invitation and to listen to what they have to say. So we do not control what--you know, what it is. We did not put any preconditions on it.
QUESTION: What is the latest assessment on when the meetings, Board meetings will occur on Argentina and Turkey?
MR. DAWSON: I don't have them in my own mind now because in both cases we have missions that need to be done. So I am not quite sure that I have a date. They are typically two to four weeks after the mission.
QUESTION: A while ago, maybe around the spring meetings, there were reports that some poorer CIS countries were on the verge of being included in the HIPC. I wonder if you could give us an update as to how that is proceeding, if it is proceeding, with Kyrgyz, I think Georgia, Moldova, countries of that sort.
MR. DAWSON: The issue of the debt of the poorest CIS countries is indeed an issue of concern. It is an issue that we are working closely with the World Bank on. Where it comes out, whether it comes out HIPC or not HIPC, I think each of the countries you cited and the rest in that group, each have somewhat differing circumstances. Some clearly do not fit under the existing HIPC guidelines. Some come closer to that. But that is not to say that there is not a serious problem for these particular CIS countries. And so we, along with the Bank, along with a number of both bilaterals and others, are looking at the problem, and we will be trying to figure out what to do. It was, in fact, an issue that came up in the meeting with the Russian authorities in Moscow with the Managing Director last week.
MR. DAWSON: It is--I mean, it is being very actively looked at, so it is a question that you may--you know, you may not want to ask me about it in my next press conference but the one after that, because it is something that is being actively looked at.
QUESTION: Just to follow up on the question that was asked about Argentina and the dollarization. As I remember in the past, the Fund has basically commended the Argentine authorities and suggested that they stick to their current exchange rate regime. Does the Fund continue to believe that Argentina can make progress in dealing with its economic problems under the current exchange rate system?
MR. DAWSON: The Argentine authorities have and continue to face a difficult situation. The exchange rate regime is one that under the present program with the zero deficit, we have the belief that it hangs, that it is achievable. I do not think your premise is quite accurate, in terms of our having made explicit statements on exchange rate regimes.
Exchange rate regimes in one sense are the choice of a country, and in the other sense, they have to be supported by good policies that allow them to be achieved. Our judgment has been and continues to be that, first of all, the Argentine program, historically, has clearly worked. The events of the last few months have made people nervous and so on, but that continues to be--to be our judgment.
MR. DAWSON: I mean, achievement of the targets would allow the program to continue, which obviously means the regime, yes.
[Whereupon, the press briefing was concluded.]