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Transcript of Press Briefing|
By Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, May 16, 2002
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MR. DAWSON: Good morning, everyone. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings.
Before I take questions, I have a number of items I would just like to mention. First, the Managing Director is back in Washington after a 5-day, 5-nation visit to Africa. You may have noticed that last Friday the Fund Executive Board endorsed the Fund's Africa capacity-building initiative, which includes a commitment to strengthen the capacity of African countries to design and implement the poverty-reduction strategies. A centerpiece of this commitment is the establishment of African Regional Technical Assistance Centers, or in Fund-speak AFRITACs. that's T-A-C-S, not T-A-X.
Technical assistance is something the Fund is active in globally, but generally does not get much attention. AFRITACs are another example of our active technical assistance effort, and indicate also the increased level of partnership between the Fund and our member countries, especially in the developing world.
While the Managing Director has returned to Washington, the Deputy Managing Director, Shigemitsu Sugisaki, will be in East Timor next week to represent the IMF at the nation's independence celebrations on May 19th and 20th. I don't have an exact date for East Timor's membership in the Fund, but it's anticipated that the Fund's Board of Governors will complete voting on their membership request this month. The Governors' approval is necessary to pave the way for our 184th member country.
Finally, next to finally, Media Relations has circulated, and I think you may have a joint note by the heads of the IMF, the World Bank and the World Trade Organization. Earlier today in Paris it was delivered to the OECD trade ministers who are meeting in Paris. I do not believe it's been publicly released until this point.
As you'll see from the note, Managing Director Köhler, President Wolfensohn, and Director General Moore have underscored the critical importance of trade going hand in hand with aid to the world's most impoverished nations. The Fund, the World Bank and the WTO hope the OECD ministers will promote the development agenda and objectives of the Doha Trade Round.
And finally, there is a note out of Buenos Aires this morning, which I would confirm, that Minister Lavagna will be visiting the Fund next Tuesday and Wednesday for meetings with Fund management. I believe he arrives on Tuesday afternoon and will stay over until the next day.
So I think that is what I have, and I will be happy to take your questions now.
QUESTIONER: I have two questions. The first one is we have seen some reports on the news that the IMF and the World Bank are concerned about reports on the Turkish Prime Minister's health, and I was wondering about your position on that.
The second one is Turk-Is, which is a syndicate that represents most of the workers in Turkey, has started 3 days of strike where the IMF team has just started their mission in Turkey. And they are saying that the IMF program is not helping them, their lives are getting more and more difficult. So I was wondering what your position or message would be to the workers. Thank you.
MR. DAWSON: Well, with regard to the first question in terms of the health of Mr. Ecevit, obviously, we wish everyone good health. And the idea that that's a particular issue in terms of our relationships with the authorities I don't think is a fair linkage to make. So clearly, his health is of concern, but this is not an issue that is somehow creating obstacles or otherwise to the program. The program indeed, as we have said before, is on track, and we think that there have been substantial accomplishments under the program, with encouraging signs of a return to growth.
So I think that is also to deal with your second part of the question, I think that that is the message that is increasingly in fact understood. You are correct that the mission is presently in Turkey and is reviewing the progress, which as I said, has been substantial. For example, the data on industrial production that's almost a 19-percent increase in March year over year. So I think those are very good signs, provided that the discussions are completed as planned, and the policy actions are taken as we expect they will be, the Fund Board could conclude the second review of the standby around the middle of June, and that would pave the way for disbursement of an additional appropriately 1.1 billion dollars to Turkey from the Fund.
QUESTIONER: The trip of Lavagna, which is the expectation? Do you think that this could mean the starting or at least the discussion of a new mission to Argentina? And second, the position of the IMF on the bankruptcy law that has been approved in Buenos Aires? And third, apparently the IMF is postponing one of the payments for $160 million?
MR. DAWSON: I think it's 130 I believe.
Okay. With regard to the Minister's trip, this is of course the first opportunity for the Minister to meet with Fund management. I would note that the Minister and Anne Krueger did have a telephone conversation, I believe it was Tuesday afternoon. The Minister will be—as I understand it, you may know better than I—I believe is accompanying the President of Argentina on a trip to Europe, and he will be returning via Washington for these meetings next week. So it is in that sense of the word a get-acquainted meeting.
In terms of missions, we do in fact have a technical assistance, or a technical mission I guess we should call it, that just stated work I believe today on the monetary side, and I believe a mission is likely to be going down early next week on the fiscal side. So that there is a continuing dialog relationship between Fund staff and the authorities as they request our assistance, and that indeed, as I indicated before, is how missions come apart, is when the authorities indicate, either on a specific purpose or in the broader negotiating sense, that they wish for a mission. So that is on track.
Yes, we did note the passage of the bankruptcy law. We have the text of it now and are reviewing it. It certainly would appear to be a step forward, and that's something that we welcome, but as I say, we do need in fact to read the text to see what is actually in it, but all indications are that it is a step in the right direction.
Did I answer all your questions?
QUESTIONER: No. The one of the postponement.
MR. DAWSON: Oh, I'm sorry. Yes, that's correct. There is an installment of, I believe it's 106 million SDR, which translates to approximately $130 million, that was due next week under the SRF. The SRF is a facility that envisages in it the possibility of postponement of obligations. Typically, the initial obligations are one year, but there is built into the SRF program the possibility of an extension to a second year. That does indeed need to be approved by the Executive Board and management has so recommended to the Executive Board, and it is presented to them. We will let you know when the Board acts on it, but it would be expected in the next several days.
QUESTIONER: Just a few things. Just the mission that's going down next week to Argentina, that's the third mission, is it?
MR. DAWSON: It's a fiscal mission.
QUESTIONER: The third technical mission?
MR. DAWSON: Oh, I don't think we need to get into those games because it could be, depending on what constitutes a mission, you could actually probably even have more than that.
QUESTIONER: Okay. And are you concerned about Uruguay at all? There's been some talk of increasing the size of the loan that was approved in March? And also are you concerned about Brazil?
MR. DAWSON: In terms of Uruguay, the authorities, as you probably noted, did take a number of actions, announced a number of actions on Sunday. The President announced a fiscal package aimed at ensuring compliance with the Fund, and the Central Bank has also been taking action as well.
There indeed have been reports about the possibility of additional assistance. What I'm really aware of is requests of assistance from the World Bank and the IDB. You know, we think the Uruguayan authorities have made a very courageous and I think largely successful effort in trying to deal with their difficulties. They are a country, obviously, because of its geographic location, that are heavily impacted by the situation in Argentina. We do not have under active consideration an augmentation of the program, but that is not something that I would say is out of the question if it becomes necessary that it would not be unusual at all. In fact, programs are designed to allow for that as a possibility, but as I say, it is not something that has been presented.
With regard to Brazil, indeed there have been I think some public questioning in terms of the rating agencies and so on in terms of about Brazil. And this is a country where again we think the authorities for several years now have been pursuing a very solid program both to bolster their external position, to promote growth, one that I think has in fact gotten the support of the international community and of the Fund in particular. And we think that they are in fact an example of good policy as well as good response to a difficult situation.
Back to Turkey I guess.
QUESTIONER: Because of the Prime Minister's health, there is speculations about early elections. Would Turkey's program endure early general elections within say a year? Or a second question is, after last year's crisis, Turkey was a major arms buyer, significantly reduced defense spending, and now it is preparing to sign at least one multi-billion dollar contract with U.S. defense companies. Is this okay under the program? Thank you.
MR. DAWSON: With regard to the question about elections, I don't think we have a view, to be perfectly frank. As I say, the program is on track and the question of elections is their call. I know there's been speculation that we do or don't have a view on that subject, and we have not expressed a view, and I think frankly it would be inappropriate for us to do so.
With regard to—I'm unaware of the specific example you mentioned in terms of an additional defense procurement contract. On the other hand we do indeed have a program, and it's my understanding that the program is on track in terms of budget. If that is not the case, we'll get back to you, but I'm quite confident it is because the mission is there.
I am aware that—when I say I'm unaware of this particular example, I am aware that there has been some increase in defense spending, so that it is my impression that that has been folded into the program, and if that is not the case, we'll get back to you.
QUESTIONER: There seems to be some confusion from Dr. Krueger's remarks earlier this week about what the IMF thinks would be the best way for Argentina to lift the corralito, and to come up with either a Bonex plan or something else in order to do this? What does the IMF think Argentina should do in terms of working on its banking problems?
MR. DAWSON: I'm not quite sure what the confusion is.
QUESTIONER: She said that the best way out would be an orderly exit out of the corralito, but that they were sort of not being able to do that and they were working—
MR. DAWSON: Well, clearly, at the moment there is difficulty on figuring out how to loosen up the banking system and that there are alternative approaches that might be taken, and I gather the government is taking a look again at how to approach it. I'm not sure where the confusion is, because the goal is quite clear. You know, the basic essence of banking systems is to be able to take your money out—deposit and take your money out. I should make it balance. And that is clearly what the objective is.
In this very difficult situation down there, you have to make sure it's done in an orderly fashion, so as I say, I'm not quite sure what the confusion is.
QUESTIONER: I think that the confusion is that if the IMF considered it an orderly way to be through the—
MR. DAWSON: This is up to the authorities to figure the precise approach that they wish, and indeed, I think, my understanding of what is going on at the moment is that the authorities are reconsidering what the approach they wish to take is, but there are probably a number of different approaches that could be taken that would fit under the umbrella of orderly.
QUESTIONER: Could you give us some examples of what the IMF think are good orderly ways?
MR. DAWSON: No, because then you'll be saying the IMF says this, the IMF requests that. The authorities are looking at options. That's one of the reasons our team is down there, to help them look at options. And I think what is needed is the situation that is best—the approach that is best for Argentina in this particular set of circumstances and sitting here in Washington, I'm hardly in a position to be able to indicate that. That's indeed part of what our mission is going down there for.
QUESTIONER: Tom, just looking in general, can you say at this point how close the IMF is to sending a negotiating mission down to Argentina which would be able to establish a letter of intent?
And second of all, I'd like to get your reaction to a prominent Nobel prize-winning economist, who laid out an opinion last weekend, saying that the IMF's insistence on fiscal tightening in Argentina made things worse, and that the high rates of interest in Argentina were largely a function of external factors, such as the Asian financial crisis, and that the IMF's approach and the approach of others have amounted to blaming the victim. If I could get your reaction to that?
MR. DAWSON: I was so entranced with your second question, what was the first question?
MR. DAWSON: Oh, okay. Yeah, we've clearly indicated that there are three areas of interest, of importance that need to be addressed, and the authorities fully agree with this, if you take a look at their 14-point plan which I will refer to again in a minute, it contemplates each of these areas.
Clearly, there's been progress made on the bankruptcy law. We will take a look at that. There is also the economic subversion law, which is also an issue that needs to be addressed. And finally, there is the implementation of the agreements with the provinces. That's also contemplated in the 14-point program. It is my understanding that progress is being made in each of those areas. Ultimately it is up to the authorities to indicate when they wish to have a mission to come down, but they understand this, they share it, share these priorities, because as I say, those three issues are embedded in the 14-point plan. So I can't indicate at this point a date or anything like that.
Certainly I did note Professor Stiglitz's piece in the "Washington Post" this last Sunday and a version of it has also been syndicated elsewhere in the world. And this may not be a good place to issue the definitive response, but I would make a number of responses.
With regard to the fiscal tightening point, I think it is known—I've certainly indicated this previously—that in the course of the year 2001 when the authorities, without consulting with us, instituted the zero-deficit law. We indicated to them that we thought this was excessive fiscal tightening. So I think that quite clearly contradicts the professor's view, and I am kind of surprised that he continues to make this allegation, because this is something we have indicated previously.
He also indicates that we are not—in this particular paper, for example, he focuses on federal spending levels, barely mentioning provincial levels. As the authorities themselves indicate in the April 24th 14-point agreement, having an arrangement on the provincial level is very, very important. Professor Stiglitz seems to pooh-pooh this.
He also indicates that corruption is not much of a problem. The authorities, in their own 14-point program on April 24th, indicate that corruption issues are very important. He also, I think, fails to understand or recognize the sovereignty of the Argentine people. The Currency Board was adopted by the Argentine Government in the early 1990s, enjoyed for a number of years a great deal of popular support, and it seems as if Professor Stiglitz is trying to say that what we should have done is gone to the Argentines and dictate to them to change their currency regime. That's what we are usually accused of by Professor Stiglitz, but he seems to be taking that sort of approach himself.
So, I have to say I am rather under whelmed with his arguments.
QUESTIONER: In Argentina, you have sort of a delay strategy, and that in the end you are not interested, that Duhalde's government goes on. What do you think Duhalde is part of the solution of the problem or part of the problem itself?
MR. DAWSON: We in fact have been working with this government quite closely, continue to do so, and are hoping that we can reach an agreement with them as soon as possible, and that's I think their goal, it's our goal, it's a shared goal, and I don't think there's any issue of delay.
As I indicated, we have been responding to all of the requests of the authorities in terms of assistance, in terms of the missions and so on. So I think this is a very high priority for us. There is no element of a delay.
I think we're sort of looping back on feedback on questions, so maybe we'll cut it off.
QUESTIONER: Sorry. How long to you think the government can go on—
MR. DAWSON: That's not a question I can answer.
Can I restrict this to non-Argentine questions? And then I'll take a couple more. Okay, in the back. And non-Turkish questions to, equal treatment.
QUESTIONER: Two questions on calendar. Could you confirm that an Article IV Mission will visit Italy from the 28th of May, and then another mission on fiscal data will visit Europe, will tour Europe next month?
And I would like to also know if you already decided when and where the annual meeting will be at?
MR. DAWSON: With regard to the first question, let me see if I have—I know the mission. Yes, I believe you have the right dates. It starts May 28th, is my indication, through June 10th.
I'm sorry. I didn't quite get the second question, another mission?
QUESTIONER: Another mission on fiscal data, harmonizing fiscal data will tour Europe next month.
MR. DAWSON: Throughout Europe. I don't have anything on that. We'll get back to you.
On the final question on the precise dates of the annual meeting, this is under review. Do we have—has it been finalized?
MR. DAWSON: Okay. So the dates are on the website. The exact modalities of how the meetings will be conducted though are still being looked at by the two institutions, because as you may recall, there have been security concerns in the past, and how things will be structured is, I think, a little bit still uncertain.
QUESTIONER: Do you have any more news about when the Board can meet on Romania, and also on Ecuador? That apparently Ecuador's Finance Minister is coming here next week to have discussions with the Fund, and he's hoping to be able to get apparently a deal with the Fund sealed next week. What is that prospect?
MR. DAWSON: On Romania, my understanding is that the mission did complete the discussions on the reviews. There are some prior actions involved, but that will have to—I don't have a precise timing yet at this point.
The other question was Ecuador?
MR. DAWSON: I am certainly aware of the visit. On the other hand, there are some difficulties that we have with the proposed fiscal responsibility and transparency law. We've been in contact with the authorities on that. And we continue so that we can find ways to reconcile that with the requirements under the standby arrangement.
One last question.
QUESTIONER: My question is about the farm bill in the U.S. Do you think that this may compromise the Doha agreement to liberalize [inaudible] of poor countries?
MR. DAWSON: I don't really think—I don't have response on individual pieces of legislation. I think the—I would direct you to the statement that we just gave out that was sent to the OECD trade ministers meeting, and I think I would just leave it at that.
Thank you very much.
[End of press briefing.]
IMF EXTERNAL RELATIONS DEPARTMENT