Transcript

Transcript of a Press Briefing
By Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, October 10, 2002
Washington, D.C.

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MR. DAWSON: Good morning, ladies and gentlemen. I'm Tom Dawson, Director of the External Relations Department at the IMF, and this is another of our regular press briefings.

As usual, the briefing is embargoed until approximately 15 minutes after conclusion, and we'll set a precise time when we wrap up. I suspect we may wrap up fairly quickly since it's only been ten days since the Annual Meetings here in Washington and we've given you at least a little bit of time to rest up after that.

We issued a news brief yesterday announcing the Managing Director's trip, which is his first to the Maghreb region since he became Managing Director in May 2000. This will be an opportunity for him to explore and discuss issues of the day with President Taya of Mauritania, President Bouteflika of Algeria, and President Ben Ali of Tunisia. The purpose of the visit is to discuss recent developments in these countries and the issues confronting them and the region in general. I'd expect that the role and readiness of the Fund to assist these countries in achieving their objectives of reform and liberalization will also be reviewed.

I would also note that on the 23rd and 24th in Dar es Salaam, Tanzania, there will be the opening ceremony of the East Africa AfriTAC, the African Technical Assistance Centers, one of the first two that we are establishing to assist the region by providing technical assistance from the Fund. Eduardo Aninat, Deputy Managing Director, will be giving an address at the opening of the ceremony, and we have additional information available if you wish. Lucie Mboto Fouda of the External Relations Media Relations office will be going down there as well, and if you want to put any of your colleagues in the region in touch with her, we'd be happy to assist you.

I would also note, if I could get back for just one minute to the Maghreb trip, that George Abed, the new Director of the Middle East Department, will be accompanying the Managing Director on that trip as well, as will Mr. Hawley will be representing.

At that, I'll wrap up my comments and see what questions you may have. And good decorum, once again, in identifying yourself and your institution.

QUESTION: If Japan were to go ahead with a major workout of the bad loan problem in the banking sector, this would not be completely advisable if they did not accompany it with a strong stimulative plan or a plan to bring the country out of its deflationary spiral?

MR. DAWSON: I don't think that's the issue in terms of the appropriate monetary policy to be supportive of that restructuring effort has certainly been something we've made clear. But I did have a chance this morning to review Mr. Rogoff's comments, and if you think you needed a clarification on that point, that's fine. But I think he clearly did state the Fund position, which I think has been well known but has been again forcefully restated.

QUESTION: In an interview with me last week, Mr. Deppler said in order for the completion of the fourth review of the Turkey's program, meaning for the release of the next tranche of around $1.6 billion, the Turkish Government should fulfill all pre-actions. And the Turkish Government has made it clear that it will not be able to finish part of the prior actions, including the tax reform bill. And given this situation, the IMF mission should be continuing the fourth review talks with the new government that should appear in the November 3rd elections.

My question is: Why do you continue to hold talks with the outgoing government, which is not in a position to provide you with a letter of intent, and not wait for the new government?

MR. DAWSON: In our desire to assist a country we don't always have the luxury to wait for the next government to take place. The reality is that we will talk on a continuing basis. Certainly it's clear that the new government will need to take its own look at it, but I think it's quite productive to continue discussions. And if they cannot be concluded prior to November 3rd, then they will be continued on. But I think we could rather be accused of dragging our feet if we didn't continue discussions with the government.

QUESTION: But the fourth review will be completed with the new government. Is that right?

MR. DAWSON: It is certainly a possibility, but I don't think I can say that quite yet.

QUESTION: The Argentinean economic team is going back to Buenos Aires after two weeks here. I would like your view of what they have accomplished. They are rather happy. They say that they have draft letter of intent, and that now they have to decide of Lavagna is coming here or Anoop Singh is going to go there, and that they are starting to discuss amounts of the program. But I would like to know the IMF view.

MR. DAWSON: The discussions have been going on over the last couple weeks. I don't think I would declare them quite over yet. It's my understanding that Mr. Nielsen is maybe out of town today and coming back tomorrow, or maybe was out yesterday and coming back today. I know there's still some more discussions to take place. So, I don't have sort of a wrap-up statement you are asking for.

QUESTION: No, he said he's leaving town on Friday.

MR. DAWSON: Right, but it was my understanding we still have discussions to take place, so I think this is not quite the time to wrap up.

It is certainly fair to say that since the last time we met or you asked senior Fund officials on this subject that we have had good discussions and made some progress. So I think that's been good.

What the next steps will be, I can't tell you, but I would repeat what First Deputy Managing Director Anne Krueger said yesterday in Stockholm, that we have not, in fact, been discussing numbers yet. There are numbers out there circulating, I'm well aware, but we are not in a position now to be talking about numbers. What the precise next step would be—I think you mentioned the possibility of a ministerial visit or whether there would be a mission—I'm not in a position to say. When we have information on that, we will let you know.

QUESTION: Could you bring us up to speed on Ecuador? Are you still waiting for the elections October 20th? Have there been advances on that front?

MR. DAWSON: There have been a couple of stories, one story in particular that I noted in black print on orange paper today, about the status of the negotiations, and we know that the authorities are now in a pause in negotiations in light of the approaching elections.

We remain in close contact with the authorities, but I think our operating presumption has been that the negotiations would go forward with a new government. That is not quite what the impression of the article that appeared this morning but I think that background of the statement the authorities made and that we also responded to, is, in fact, still the status.

QUESTION: Going back to Argentina, could you just help us clarify? Can you say anything about what is left to be done, what remaining issues need to be resolved? And, also, are the negotiations complicated at all by the fact that Argentina, I guess, is now in default on some World Bank debt?

MR. DAWSON: Certainly that development—and I believe the Bank put out a statement last night in terms of the Bank-guaranteed bond—is unfortunate. But I think we've all been aware of the difficult situation facing the Argentine authorities.

We have gone through this on a number of occasions. We have been discussing issues such as the overall fiscal stance on which some progress certainly has been made on the need to develop a monetary anchor dealing with the emparo program, problems on the legal side. As I would say, some progress has been made on the fiscal side. The emparo/monetary anchor issue is still not one that is completely resolved, but it is something where we are in close contact.

So there are I would not say any new obstacles, and there has been slow progress on a number of them, so we are still hopeful that we can work something out.

QUESTION: November 9th I think has been mentioned as essentially the drop-dead date when they would go into default on this multilateral debt. Is that the date that you think, or do you have a date?

MR. DAWSON: I think that's related to the grace period of the Bank, but I have nothing to say on that.

QUESTION: Should Argentina, find itself on November 9th still without an IMF deal and having missed that grace period, what would the implications between, if you could just sort of spell them out, at the IMF and how that would affect negotiations.

MR. DAWSON: We would still be trying to work with the authorities to help them resolve their problems. It has already been an unfortunate development. It would be a further unfortunate development, but it would not affect our intention to try to work with the authorities to see how we can help them work out a program. I'm not sure how I'd describe "harder" or "easier."

QUESTION: Is the Article IV for Italy still scheduled for the Board on the 21st of October?

MR. DAWSON: Yes.

QUESTION: Just on Brazil, is there any update what the next step is, or are we just waiting for the October runoff election?

MR. DAWSON: As we all know, the election is going into a second round, and we have indicated for some time now that we look forward to working with any government that is committed to following the sort of policies that have served Brazil well in the past. It's certainly clear that both of the candidates who made it into the second round have made statements along those lines as well. And so we look forward to dealing with the government that gets elected in slightly more than two weeks.

Thank you very much. We'll lift the embargo at 10:00 a.m.