Transcript

Press Briefing by Thomas C. Dawson, Director, External Relations Department, IMF

November 19, 2002

MR. DAWSON: Good morning, ladies and gentlemen. I am Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings. This is the last briefing that we expect for this month. We scheduled it today because I will be accompanying First Deputy Managing Director Anne Krueger to the Group of 20 meeting at the end of the week in Delhi.

For planning purposes, I should also note the Fund will observe a two-day holiday on November 28-29, the Thursday and Friday of Thanksgiving week. You, of course, can still reach Media Relations during the official holiday via their 24-hour phone line, and a duty officer will be on call. That is all I have to announce at this point. I'll be happy to take any questions that you may have.

QUESTIONER: The governors of the 24 provinces of Argentina met yesterday and part of Sunday. They came out with a 12-point plan which was crafted in part to please the IMF. What can you comment about that?

MR. DAWSON: Well, we have not actually had a chance to look at it in detail. We are familiar with the reports of what it contains and the support that it enjoys from what appears to be a majority of the governors. And I would say that we strongly believe and have made it clear for some time that a political consensus is necessary to be able to have a sustainable program in Argentina, or, for that matter, in other countries as well.

It is important, of course, that whatever agreement is reached needs to be implemented, and indeed, implementation has been a concern of ours for some time in Argentina, and I would refer you back to the statement that was issued last Friday in the name of the First Deputy Managing Director Anne Krueger, indicating that progress has been made in a number of areas, but that indeed progress remains necessary in other areas, including the area of political consensus. And we will be examining the statement. If we have more for you later today, I will let you know, but I am not promising that at this point.

QUESTIONER: Coming back to the agreement or to the support of the governors, when you say that it will need some implementation, that does mean that some of the points that they have agreed on will have to be put it in place before--

MR. DAWSON: Yes, certainly. Certainly. Programs typically require actions.

QUESTIONER: But real actions--

MR. DAWSON: I mean, we are in the process of working out in a number of areas that are not yet resolved, but I think it would be highly unusual for a program not to have some prior actions.

Sometimes, of course, if actions happen before a letter of intent is signed, then they are not actually prior actions anymore because they have actually been done. But, in any event, certainly we would expect that implementation is going to be essential to get support for the program.

QUESTIONER: And then another question: There were questions about a mission going to Buenos Aires. Has that been confirmed?

MR. DAWSON: No, that has not been confirmed. We will, as we have the practice now, let you know when a mission does go down. But at this point we do not have one scheduled. But that is a very good question, and notwithstanding the fact that we do not have a press briefing for a couple of weeks, if that development happens we will be sure to let you know, although I have to say the magic of the marketplace works pretty well, and you may hear that first from Buenos Aires. But if it is true, we will certainly confirm it.

QUESTIONER: I am wondering, how does the World Bank loan situation bear upon your talks with the Argentine authorities? And they obviously face a mid-December deadline before they are cut off from all flows from the World Bank. How would that complicate signing an agreement with the IMF? Or what is the interplay there?

MR. DAWSON: Well, certainly we do regret the nonpayment by Argentina of the obligations to the World Bank, and certainly it does indeed make the situation more complex.

I think at this point, however, what we are trying to do is to work out an agreement, but certainly we would hope --you know, an agreement would require--we would expect that they would also have made some progress with the Bank. But certainly it is a factor. The nonpayment we regret, but that doesn't stop us from trying to work forward to reach an agreement. But for an agreement to go forward, we would need to be in close consultation with the Bank and see what the situation was there. So we will face that aspect of it, when we get to it. But the first two points I would make are: one, we do regret the nonpayment, but two, we are still working to try to reach an agreement. But as I think I have made clear in these comments and in previous comments, there is still a fair amount of work to do in that regard.

QUESTIONER: The new Turkish government began to work today, and do you have any comments on the formation of the new government, the new economic people, and what's the game plan from this point on? Thank you.

MR. DAWSON: We welcome the formation of the new government and look forward to working with it. We expect the first contact to be a short visit to exchange views on the government's intentions to be followed by a full mission thereafter.

The Fund's senior resident representative in Ankara has been in regular contact with interested officials and parties, and we would expect more formal contacts now that the incoming administration is getting in place.

I would note that the program has worked quite well --performance has been stronger than market expectations -- and certainly in the post-election period there has been a substantial rally in most of the markets. And I think this is an indication and testament to the effective work of the Turkish government and the Turkish society in implementing the program. And we look forward to this progress being maintained.

QUESTIONER: When will there be contact the new authorities?

MR. DAWSON: We would send the mission to meet with the new government as soon as they invite us, and then we would expect a fuller mission thereafter. I don't know when. The ball is in their court. We would expect it would be within the next few weeks.

QUESTIONER: Who would go?

MR. DAWSON: I do not know yet. In part, it depends on the nature of the invitation and so on. I mean, we would expect the mission leader would be going. I do not know whether it would be at a more senior level or not at this point.

QUESTIONER: Minister Lavagna said yesterday he is confused about what the IMF means by getting political consensus in Argentina for an agreement. Can you illuminate us and illuminate him?

MR. DAWSON: I would not pretend to try to illuminate the Minister, but I certainly do think it is part of my job to illuminate you, or at least educate.

Fund programs need to be sustainable--sustainable in both an economic policy context but also in terms of implementation within the political system, society that is, in whatever country. This is not an issue unique to Argentina. Political consensus, political support, is something that is quite important.

The form that this consensus, this support takes, however, varies very much from country to country, and it is indeed the authorities' responsibility to marshal that consensus and to indicate to the Fund the nature of the consensus and the support, and then the Fund makes the judgment in terms of the program going forward.

In this context, we have not only, however, the need to develop political consensus going forward, which is, I think, what your question was directly addressed to, but in addition, we have to work on the implementation of the actual measures. Both of those are important. But the measures and their implementation--implementability, if that is a word--have to be judged in the context of political support, political consensus.

QUESTIONER: Don't you think that years from now, when people begin to study this, the IMF will be a little bit blamed for the situation in Argentina? That the IMF will be found to be actually at fault for Argentina to have been forced to default on the World Bank and et cetera? I mean let us say that we are ten years from now studying the situation. Wouldn't you blame the IMF a little bit for this situation?

MR. DAWSON: First of all, I have to disagree with almost every one of your premises. First of all, let us take, for example, the fiscal target under the program of 2.5 percent primary surplus to GDP. That is the Argentine authorities' own target. So the references that are often made in the political context in public, and even in the press, in terms of the Fund demanding this or that, are inaccurate. We are working with the authorities for them to achieve their own target.

So I think one needs to distinguish and get away from the sort of simple model that the Fund goes in with a list of conditions and, you know, it is take it or leave it on the part of the authorities.

Indeed, I would note the conditions that we are working with are largely the conditions that came up in the last April statement that was also worked out with the authorities and the governors in terms of the nature, the element of what would constitute a politically sustainable program in Argentina. And I note--though, again, as I say, we have not done the detailed comparison--that many of the elements in the April statement with the governors are similar to what at least I have read, you know, initially in the statement from last night. So, no, I do not think that is the case. We are trying to work with the authorities for them to meet their targets.

Now, you asked another question: Will the IMF be blamed? Well, I am sure the IMF is going to be blamed by somebody. That is sort of the nature of our existence. I mean, I do recall the former First Deputy Managing Director, Mr. Fischer, saying the definition of a successful IMF program is when no one calls it an IMF program.

QUESTIONER: I guess the question, then, to put it a little simpler, is: If many of the points from the 14-point plan in August are--

MR. DAWSON: April. April.

QUESTIONER: Sorry, April--are, again, in this new 12-point plan, and it says many of the same things, since the April plan was not sufficient to get both sides to be able to sign a deal--

MR. DAWSON: No, that is incorrect. It is not that the April plan was not sufficient. The April plan was not implemented.

QUESTIONER: Well, what need they do with the 12-point plan--

MR. DAWSON: Let us go back--first of all, I cannot pass a complete judgment on the 12-point plan, not having gone into it in any great detail. But I certainly-I am quite familiar with the April program, and if you look at it, a number of issues in the April program are precisely the same issues that are still being actively discussed in Argentina in the political context. And as I said, there seems to me at least to be a pretty substantial overlap with the 12-point. So implementation is the answer to that. It is not that there was something in the April plan-I am not sure I would quite call it a plan, but it was a list of--it was an agreement and a list of reasonably specific measures. Quite a few of them actually have not been accomplished. That is the key issue. The issue is implementation of what was their plan. This was a plan--I should note the April plan, just as the plan yesterday, were plans that they worked out domestically and then presented, and that is the basis--the April plan is one of the key inputs that we have been working with since that time.

QUESTIONER: [inaudible] specifically things that weren't in the April plan [inaudible]?

MR. DAWSON: The resolution of the financial sector and the banking sector, there were a number of items there that have not been completed. The full implementation of the provincial fiscal accords has not been to date completely implemented. Those are two to start with. Oh, and indeed one of the measures was keeping current with the multilaterals. I believe that was the first item, as I recall.

QUESTIONER: In relation to Brazil, some Brazilian financial officials have visited the IMF recently, such as Mr. Amaury Bier. And in the beginning of December, the President-elect of Brazil will come to Washington. My first question is if you can give us an update on the conversations that have been taking place here. Number two, if Mr. Luis Ignacio Lula da Silva will have any meetings or if there is anything planned when he comes to Washington, any meetings--

MR. DAWSON: I do not have--with regard to the former meetings, I am not aware that they were transition-related meetings. I am not aware that they were, and I think I would be aware if they were.

Certainly we have had contacts with the existing government, and it is my understanding that the mission that is in Brazil at the moment will be meeting with Mr. Palocci. I saw a press report that this was occurring today. I am not sure whether that is true or not, but that would sound right because I think the timing is about right.

In terms of a possible meeting of the Managing Director with the President-elect, as I said at the last press briefing, the Managing Director indicated in a letter to the President-elect his congratulations on his election and a willingness to meet with the President-elect at a time of mutual convenience. And it is my understanding that this is a subject that will be discussed in the session with the mission today. Whether that meeting will be during the President-elect's visit around December 10th, or whether it will be at another point, I do not know.

But again, on this issue we will let you know as soon as we know, and we may well know something about--I am sure we will know something about that in the next two or three days.

QUESTIONER: Just to follow up, does the situation in Argentina and mostly the nonpayment to the World Bank have any effect whatsoever on the discussions that are taking place in Brazil?

MR. DAWSON: I do not think so. The mission that is down there is reviewing the Brazilian program, which is very much on track, has had quite a substantial overperformance on a number of indicators. If you look at the spreads and so on, the spreads tightened again yesterday. The current account has been strengthening. The Brazilian program is doing quite well, and this review will be concluding in the next few days. So I do not see this linkage. Markets speculate in that regard, but I would say market performance is pretty clear, that the markets have been indicating quite a deal of confidence in the prospects--recent performance and prospects in Brazil.

QUESTIONER: I am sorry. You may have answered this already, too, but just to clarify. Has the IMF had any official contact with the Argentine Economy Ministry since last night on this accord, or is there a plan for Anne Krueger to speak with Minister Lavagna about the status of the accord?

MR. DAWSON: Since we heard about the statement, the authorities did indicate that they would be sending it up, sending up the statement. And obviously we have received that. Whether there will be contact--

QUESTIONER: You have received it?

MR. DAWSON: We have received it, yes. What the next steps will be in terms of contacts with the authorities I cannot specify right now. However, I would stress that we are in daily contact with senior officials in the government, not necessarily at the ministerial level but pretty close to that. So I am sure there will be contact in the next day or so with at least Mr. Nielsen, if not the Minister.

QUESTIONER: Again, following up on Argentina, just so that the IMF is not accused of moving the goalpost again, could you signal, indicate what are some of the implementations the IMF expects to see before an agreement can be signed, perhaps something on the fiscal front, the budget for 2003?

MR. DAWSON: I would simply direct you back to the statement of last Friday where these items are, in fact, discussed in a reasonable detail, and certainly the monetary anchor, the fiscal framework at the federal and provincial level for 2003 as well as the pricing and regulatory framework for the utilities are all specified in that statement.

And again, I have to take a slight exception--but with a smile on my face--to the premise of the question about moving the goalposts again. If you go back to the April 25th or so statement of the agreement with the provincial governors, and the items there, those are the items, those are the dimensions of the field that we are dealing with. They are still the dimensions of the field. And as I said, again, politely last time--not necessarily with a smile on my face--if people are accusing us of moving the goalposts, I would like to know specifically what issues that they believe we have, quote-unquote, moved the goalposts because I have not--I am not aware of it.

QUESTIONER: I may be wrong on this, but I understand that the utility tariffs are not mentioned in this agreement, in this 12-point agreement. Would that then become a major problem or sticking point in the conversations looking ahead?

MR. DAWSON: We have specified that utility price issue is an issue that does need to be addressed in terms of going forward. The fact that it is not in the 12 points, though, I do not believe means it is not an issue that is in play. There is no reason to believe that those lists constitute the beginning or the ending or the complete list of measures that would be necessary. And again, I have not looked at the 12 in detail. There may be some measures of the 12 that are not even part of a Fund program.

QUESTIONER: About the utilities, that was one of the items that people in Buenos Aires said that you have added. So you do not think this is necessary to take place before an agreement is reached?

MR. DAWSON: No, I did not say that at all. He pointed out it was not in the 12-point agreement, and I pointed out that what will be in a Fund program does not have to be what is in the 12-point program. Both things could be in it that are not in the program, and things can be in the program that are not in it.

QUESTIONER: So but--

MR. DAWSON: Last Friday we made it very clear--again, this is why I am carefully--

QUESTIONER: He said one of the items that was not in the 14-point--

MR. DAWSON: And there was no need that the 14-point paper constitute the only elements that would be in the program. That was never the case. I mean, a framework for utility prices for sustainable enterprises is not unusual at all in Fund programs. It would be unusual if it were not an aspect of the program.

QUESTIONER: But would you agree that they are right in the sense that this is a new item--

MR. DAWSON: No.

QUESTIONER: --that was not in the--

MR. DAWSON: Well, it may not have been in the two pieces of paper that came out of the negotiation of the governors, but again, that is not the only basis on which we work. Again, there are elements undoubtedly in the April program or yesterday's program that are not in the Fund program, and there are elements in the Fund program that are not in that, because it was not intended to be the comprehensive program. It was the nature of the agreement between the governors and the executive branch.

Maybe a couple more questions. I think we have exhausted Argentina, but please feel free.

QUESTIONER: The last one in this case.

MR. DAWSON: Somehow I doubt that.

QUESTIONER: Last week, before heading to Buenos Aires, Lavagna said that something that he heard here made him doubt that the IMF had the will to reach an agreement. My question is: What is that feeling correspondent here at the IMF?

MR. DAWSON: We are working extremely hard to try to get an agreement to work with the authorities--

QUESTIONER: [inaudible]Argentinean government with--

MR. DAWSON: No, I think we absolutely believe that the authorities are working very, very hard. As I have noted in previous occasions, the authorities are themselves dealing in a very difficult environment where they have had--and this is no news over the course of certainly this calendar year--difficulties in getting support in the congressional context, at the provincial level context, in the judicial system. They have a very difficult task. But I do not think we have any doubt at all of the Minister and his team's commitment to trying to reach an agreement. And we have a commitment as well, but it is not easy.

QUESTIONER: A question on Paraguay. I want to know if you consider--still consider it possible to reach an agreement with Paraguay, if you are worried about the situation in the country?

MR. DAWSON: I am not up to date on Paraguay, so I would rather not try to tax my memory. But this does not count as the last question. In the back? And this is the last question.

QUESTIONER: The President of Bolivia visited the IMF last week. How much money or what kind of agreement is Bolivia looking for with the IMF?

MR. DAWSON: Well, not to be too cute in my answer to the question, you should ask the authorities if that is what the question is. Even though the President is someone well known to the Fund, having been in office before and well known around, I am not aware that we are talking about a specific number. I do not recall a specific number coming out.