Transcript

by Thomas C. Dawson
Director
External Relations Department
International Monetary Fund
Thursday, March 28, 2002

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MR. DAWSON: Good morning, everyone. I am Tom Dawson, the Director of External Relations at the IMF, and welcome to another of our regular press briefings.

Just a couple of items before I take questions. We do not comment about leaks, reputed leaks, or speculation about the possibility of the World Economic Outlook figures have been or might be or will be leaked. You can feel free to ask me about it, but I will have no serious comments in response. Though I am sorry to disappoint you in that regard, I do not want you to go away without something to contemplate. So I would like to mention that on Wednesday, April 10th, we will release Chapters 2 and 3 of the latest WEO. The remaining chapters, including the forecast, will not be released publicly until April 18th.

The April 10th release of these two chapters is an innovation. These are the chapters that are sometimes not closely explored by the press in the rush around the regular WEO press conference. They are sort of the analytic chapters, and we hope that the advance release will assist you and the public in focusing a bit on the work that is done by our Research Department, and in particular the WEO team.

The Media Relations Division will be circulating details of the April 10th and April 18th releases within the next week.

Yesterday, we posted further details on the external website regarding the Spring Meetings, April 20-21, here in Washington, and please check the site if you have questions on the tentative schedule. You will see that the Managing Director will be speaking on Wednesday, April 17th, at the National Press Club in Washington. The luncheon address will be his only public appearance [ahead of] the Spring Meetings, so I urge you to attend the luncheon address. And there, of course, will be a question-and-answer period.

As for the Spring Meetings, let me remind you that the deadline for submitting requests for press accreditation is Friday, April 12th. You can sign up via the website, and I do expect to conduct another briefing before the Spring Meetings so that I can review some of the agenda items.

In addition, I'd like to welcome Olga Stankova, who joins us this week to take up the duties as the press officer responsible for the Baltics, Russia, and the other former Soviet states. Conny Lotze, who's been doing double duty for several months, can now concentrate on her area of responsibility, Western Europe. Welcome to Olga and thank you to Conny.

Now, I will take your questions.

QUESTION: Can you say anything about the supposed meeting Monday here of a group of experts to confer informally on Argentina?

MR. DAWSON: Yes. As is customary, we do have a variety of outreach efforts with academia, with other interested external groups, individuals, and we did, in fact, have probably two-thirds-of-a-day session with about eight or nine outside economists who met with management and staff here to review the Argentine situation, history, present, and prospects.

I think you will understand that while we have no hesitation in confirming the meeting, it is not something where we feel that it is appropriate for us to be commenting on who said what and so on. But I think it is part of our general effort to try to get the best advice and best opinions from as wide a circle as possible.

QUESTION: [inaudible-off microphone.]

MR. DAWSON: On the country situation, I certainly know that during the Asian financial crisis a number of outside experts, political and economic, were consulted. I am not certain whether this particular format was followed. On policy issues we have had a number of seminars not unlike this one, where we bring in outside experts to talk about particular issues. I can remember, just to pick an example at random, a seminar that we had on dollarization that had a number of outside experts. So that is not unusual, but given the timeliness and interest in Argentina, I think this probably attracted particular notice, and that is perfectly understandable.

QUESTION: Do you see this as an indication that the IMF might be [inaudible-off microphone]?

MR. DAWSON: No. I think it indicates that we are an open, learning institution, as the Managing Director has said, and we solicit and encourage as much advice, input, solicited or unsolicited, as we can get. In this case, we happened to solicit it. We do not usually have a problem with unsolicited advice because it seems to come in, anyway. And often the unsolicited views are that we do not reach out and that we do not consult and that we have a one-size-fits-all policy. I think this is pretty good evidence that that is not the approach.

QUESTION: What is the status of the talks with Argentina on establishing a new program at the moment? What is the prospect of sending another mission down? How would you describe the general progress in moving towards a sustainable economic program? And what do you make of the currency movements this week with the peso dropping towards four against the dollar? Will this type of volatility make it more difficult, in fact, to establish a sustainable program?

MR. DAWSON: Do you want a yes or no answer?

With regard to the mission, as President Duhalde and Managing Director Köhler agreed last Friday in their meeting in Monterrey, we will be sending a mission in early April. I think it is—and as you have heard or read—coming out of Buenos Aires. It will be going down in phases. An initial technical mission, technical staff, will be going down, I think it is fair to say, early next week. The bulk of the mission will be following shortly thereafter. The mission itself will be in place, as we had indicated, in April. I do not have a precise date because travel plans sometimes do change.

This is, in fact, as the Argentines noted in the statement—with which we concur—last Friday, a negotiating mission. The basic expectation was that it would spend a couple of weeks down there, coming back shortly before the Spring Meetings.

There would not be an expectation that this negotiating mission would lead to an agreement. Indeed, the expectation would be that it would hopefully identify issues better, narrow issues to be resolved, such that, again, if things go well, a mission would go down shortly after the Spring Meetings that would have the potential of working on a draft letter of intent. So that is basically the schedule.

With regard to the development of a program, certainly we remain in regular contact with the Argentine authorities as they are working on elements of the program. We, of course, have our resident representative down there, and I think we have made progress in the sense of being able to identify what issues we think need to be addressed, and I think it is a relationship in which we have indeed been making progress.

With regard to the market developments, I think you may be about 24 hours out of date, because the peso strengthened substantially yesterday, closing, I believe, just below 3.0. And I think the market was somewhat more on a balanced basis yesterday with minimal intervention. And I think that certainly is a welcome development. It is my understanding that the domestic markets are closed for the Easter weekend. So we continue in close contact with the authorities. The meeting last week, as I said, was quite a positive one, and we are on track, as indicated last Friday, in terms of sending forth the mission with the possible time line of the sort that I just indicated.

QUESTION: In the mission, the second group, is Mr. Singh in the second group or—

MR. DAWSON: No, I can not say whether it is the second or the third. Mr. Singh will be going down after the first group. As I said, the mission will be in place in Buenos Aires in early April. But there certainly will be an initial team going down before Anoop goes down, and he will be going down shortly after they do.

QUESTION: What is at this moment the assessment of the IMF of the dangers posed to the other countries of the region because of the situation in Argentina?

MR. DAWSON: Well, we certainly keep a close watch on the developments and on impact on the region. Certainly you took note of the recent approval of an arrangement for Uruguay, which is an evidence of the Fund standing ready to support members that may be affected. We remain in close contact with the other neighbors.

Certainly the traditional elements of financial contagion that people looked at and think of in the context of the Asian financial crisis or the Russian crisis do not seem to be apparent. But I think it is clearly our obligation—and what we are, in fact, doing it—to keep close watch on that potential and in close contact with the authorities in the neighboring countries.

QUESTION: The Turkish Prime Minister made a statement the other day saying the government would review giving autonomy to the agencies such as the banking regulation and supervision and telecommunications regulation, and et cetera. If the government takes a step back on these issues which are IMF advices to Turkey, do you think it would affect IMF-Turkey relations?

MR. DAWSON: I think that is a somewhat hypothetical question. We do believe that Turkey has made a good start on its new economic program, and we do believe that to cement these initial gains the authorities do need to pursue program implementation vigorously. But I do not have any particular comment in regard to that, although we certainly do believe the authorities have made a good start. QUESTION: Could you give us a general assessment on Turkey? Do you have a general idea about when the Board could have its next meeting on Turkey? And I presume there are a few prior actions the Turkish Government should take before the release of the next tranche.

MR. DAWSON: I do not actually have a timing on that. The Article IV mission and review mission finished their work on the 18th. Basically, I think things looked pretty good from that, and I do not have a date on the Board meeting, but mid-April is what we are looking at. When we have more information, we will let you know.

QUESTION: The IMF seems determined to be tougher with Argentina after being over-lenient in the past. Do you think the IMF is tougher with Argentina than with other countries to prevent making more mistakes? And how long do you think Duhalde's government can survive without IMF aid?

MR. DAWSON: I was going to challenge the premise of your first sentence, but then you sort of questioned whether the premise was valid in your second sentence. We develop and tailor policy advice to the circumstances of individual countries, of the circumstances that they face. So I think this speculation—and I see it occasionally by some outsiders—that somehow the Fund is being tougher, quote-unquote, to Argentina than to other countries I do not think has any basis in fact. And if people believe that, I would like someone to perhaps cite an example of that, because I see this allegation but I do not see particular examples.

And as I indicated in response to an earlier question, we have established, I think, a good relationship with the government. The Managing Director and the President had a very good meeting last Friday, and we are working to find the ways we can to support the government in what is—continues to be a very difficult situation. I would take note that last night the Inter-American Development Bank announced the reprogramming and rapid disbursement of close to a billion dollars of assistance to support social safety net and related programs in Argentina. This is exactly the sort of measure that we think the development banks should be doing at this point, as we continue to work with them on developing this comprehensive and sustainable program, as IDB President Iglesias indicated.

QUESTION: The relationship with the provinces have been a very big issue in the discussions of Argentina with the IMF lately, and I understand that one of the concerns of the IMF is to make any commitments that the provinces make really binding. I understand that the model that has been suggested is the Brazilian model in 1999, a fiscal law which includes sub-national levels such as their states.

Is the IMF pushing something similar to force provinces to comply with the commitments they make to the federal government? Because, in any case, the IMF doesn't make agreement with the provinces. It makes agreement with the federal government only.

MR. DAWSON: Well, the Brazilian experience has certainly been an instructive one, and I think it is something people can learn from. But I would note the Brazilian effort in that regard, where they had had indeed a federalism issue regarding revenues and spending with the states, was one that the Brazilians came up with their own approach and a program that seems to be working quite well.

I know that the Argentine Government is pursuing its own approach to dealing with an issue that has some similarity. But this is not a cookie-cutter approach from the Fund where we are saying, "Take this model and apply it." We certainly think there are lots of models from which lots of things can be learned, but the solution to this issue in Argentina is going to be an Argentine-developed issue. And as we can provide them with advice—and they are in contact with us and they want our advice—we will do it. But the solution is clearly going to be an Argentine solution, and certainly the authorities, the present authorities there understand the relationship quite well because a couple of the senior people in the government are themselves former provincial governors.

QUESTION: [inaudible - off microphone].

MR. DAWSON: I think the government has indicated that the agreement that they have at the moment with the provinces sets forth some quite reasonable goals and objectives, and assuring achievement of these goals is important, and I think that is what the government is focusing on.

You are correct, our formal relationship is not with the provinces. It is with the national level. But, clearly, given the history in Argentina, as in other countries, the state-provincial or state-state, federal-state relationship is critical. But we have confidence that the authorities understand the nature of the problem and are trying to find out ways that they can do it in a sustainable fashion, and sustainable means politically sustainable as well, and we are quite understanding of that.

QUESTION: Are you aware of any efforts by other countries in the region to help Argentina?

MR. DAWSON: I have seen some degree of speculation about it. If you are talking about financial support, I am not aware of that. But certainly they are getting advice and other forms of support from the region. I am not aware of anything like that, although I have seen some speculation.

QUESTION: Specifically trade, better conditions and so on and so forth, not only financial.

MR. DAWSON: Well, certainly trade finance is certainly an area that is of importance for Argentina as they go forward, and I think there are a number of ideas that people are looking at, at ways to make sure that trade finance is available for Argentina as they go forward. I am not familiar with whether any of that is in a particular regional context, but I know that a number of the trading partners and institutions that deal with Argentina have been focused on that.

QUESTION: Going back to the provinces of Argentina, do you think that the federal government is doing enough? You know, so far they have reached an agreement as far as the spending cuts are concerned, but still the provinces are issuing that sort of funny money.

MR. DAWSON: Certainly the agreement that was reached with the provinces is a good step forward. The devil, of course, is in the details and in the implementation, and that is one of the issues that the mission will be addressing.

QUESTION: Two more questions on Argentina.

One, this gets back to the earlier question. Are you concerned in your negotiations with Argentina that in your effort to get it right, as you had said in the past, that things are dragging on too long and the situation may be deteriorating to a much greater degree?

The second question is something that is been floated throughout the week, is an idea of re-pegging the peso. How would the IMF look at a move like that?

MR. DAWSON: Well, there have also been ideas floated, including in La Nación this morning, that that is apparently—at least according to that report—not an item on the table. So I think under the present circumstances, the floating rates seems to be serving them well since the ability to defend a fixed rate at this point would seem to be difficult without the supporting policy measures.

On the first part of your question you have only quoted half of what I have said. I said that faster is better than slower, as well. So, clearly, we do recognize that the situation is a difficult one, and as I believe Secretary O'Neill said yesterday, faster is better than slower, but also getting it right is important. So it is a balance.

QUESTION: What does the IMF think about President Bush's idea that we are going to increase aid to developing nations, but that there are going to be strict guidelines that these nations have to adhere to in order to get the aid? Does the IMF have a comment on that?

MR. DAWSON: Well, in the development community, the international economic institutions community, the idea of assistance being targeted to the countries that are best able to use the assistance is one that is getting more currency. And I know that a number of other governments, including the U.K., have talked along similar lines.

So the idea of assistance being targeted toward the countries that are in the best position to use it is, I think, understandable. It increases, for example, the willingness of the political system to support larger levels of assistance if they have a sense that it is being used appropriately, both in terms of economic policy but also in terms of targeted assistance for humanitarian or social aid.

So it is certainly an approach with which we are comfortable and has a broad degree of support in the international community.

QUESTION: Can you say anything about what you're hearing about what might be the climate in which the Spring Meeting would take place, street participation, things like that?

MR. DAWSON: Certainly given the history of the last several sets of meetings the security concerns are always important. It is my impression, my understanding that there are a number of groups that are planning what I guess I would call anti-war demonstrations around the time of the meetings. I think there is some degree of interest on the part of some groups to have an element of that that may direct itself toward the Fund and the Bank. But I certainly do not have a sense of the level of activity comparable to the spring 2000 meeting, for example.

And I do note, to encourage you to sign up for the meetings, that it does seem that the press interest in the meeting seems to have lagged a bit. Now, I do not know whether you are a leading or lagging indicator for street demonstrations, but I think the press interest is about the level that it was in the pre-spring 2000. Since I am a believer in the efficiency of markets, I suspect that maybe you guys have sensed it by your—I am sorry to say—lack of interest in our meetings.

Thank you. Thank you very much.

[Whereupon, the press briefing was concluded.]