Thomas C. Dawson
Thomas C. Dawson

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Argentina and the IMF

Dominican Republic and the IMF

India and the IMF

Iraq and the IMF

What does it mean?
Debt

Investment

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Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, May 27, 2004
Washington, D.C.

View this press briefing using Media Player

MR. DAWSON: I am Tom Dawson, Director of External Relations at the IMF, and this is another of our regular briefings.

I would also like to note, as evidenced by our declining attendance, that today marks the start of web casts of these briefings. We will see whether anyone is watching, or whether they are just sleeping in. But if you are watching, welcome. And if no one comes to future briefings we will have the External Relations staff asking the questions.

[Laughter.]

MR. DAWSON: Though our viewers cannot ask questions right now, let me assure you, we are working on that, and the Media Relations Division will be informing subscribers to the Media Briefing Center when we are ready to launch the next phase of the web casts. I would just like to explain to the press here, and to those watching, that we are web casting the briefing under embargo. The idea is to encourage journalists outside Washington, and particularly in our member countries abroad, to participate. But we want to keep the playing field level, so to speak, for the press here in Washington, who have been such a loyal fan base.

I would like to announce that Mr. Rato's official start date at the Fund is June 7th. That is when he will formally assume his Managing Director duties here in Washington. We will keep you informed about his travel plans and press-rated events in the near future.

I would like to make a couple of operational announcements before I take questions. As you may know from the announcement on our website's public engagement section, Deputy Managing Director Carstens participates today in a conference on scaling up poverty reduction in Shanghai, a World Bank/Chinese Government sponsored conference. And tomorrow he will participate in a conference on Latin America, and the EU heads of State, in Guadalajara, Mexico. We are looking forward to seeing how he pulls that off, but I am told that it is possible.

Today at noon in this very room, we will be hosting a book forum on standards and codes, part of our public book forums that we hold periodically on topics related to the work of the Fund. Today's forum features a book edited by Benu Schneider, a respected expert in international finance, currently based in the Globalization and Development Strategies Division at UNCTAD. You are all welcome to attend the forum.

And now I would be happy to take any questions that you may have, please, observing proper etiquette.

QUESTIONER: A couple of questions. One on the Dominican Republic. They are having problems with their program, or sort of seem to be in a wait-and-see attitude. How can you update us on that, on their Second Review, I think it is?

And regarding Argentina, there seem to be signs of some flexibility on their debt negotiations. I was wondering if you could comment on that, and also on their decision to--on this export tax, this 20 percent export tax on gas, if you have a reaction to that?

MR. DAWSON: On the Dominican Republic, the Fund Management has offered its congratulations to President-elect Fernandez, and note the orderly election and high turnout, reinforcing the Dominican Republic's strong democracy. We have assured the President-elect of the Fund staff's willingness to be able to work with him. We also welcome the incumbent President Mejia's commitment to full cooperation during the transition, in fact, note the new government will only take office on August the 16th, so it is critical that both teams work closely together in the interim to take the decisive measures necessary to restore macroeconomic stability and market confidence.

I do not have--and I would expect that there will be a staff mission there in the near future. I do not have a particular time or particular timing to announce for you at this point, but when it does go down there, we will in our normal fashion let you know.

With regard to Argentina, I have seen both in the press, I saw the cabinet chief this morning noting the discussions or the update on the status of the debt negotiations. I have also seen other indications of contacts between the private creditors and the government, and so that process would appear is going on. And obviously, we are interested in that status since it is an important consideration as we approach the next review.

With regard to the export tax that you made reference, I do not have any comment on the export tax, per se, but clearly the energy sector is an area that is getting increased focus given some of the problems and issues that have developed in the recent months and going forward, and I think to a degree that is also a question that should be directed toward the World Bank.

What?

QUESTIONER: [Inaudible].

MR. DAWSON: By everyone. I mean you read the newspapers, by Reuters as well, that it has in terms of both the domestic situation imports, exports, et cetera, so it is obviously an issue getting more attention including of course domestically.

To repeat what I had indicated at the last briefing two weeks ago, we still expect the mission for the Third Review to take place in mid June, and the main focus of the Fund mission will be on the progress in advancing public debt restructuring and on implementing pending fiscal structural reforms. Continue to note that the macroeconomic policies on track and indeed the program's criteria for the first quarter were met by substantial margins.

On the other hand, the structural reform implementation is running behind schedule, particularly, again as I indicated last week or two weeks ago, on reaching an internal consensus on the principles for reforming intergovernmental relations.

QUESTIONER: Two questions: When do you expect the mission to go, and if it goes as the middle of the month, as everybody expects, do you think they can finish on time the revision?

MR. DAWSON: Well, you answered your first question with your second sentence. We still expect it to be mid June. And the answer to your second question is yes. I mean it still could, so I mean we do not believe that there has been any slippage in terms of the conclusion of the review. There was, as we indicated, a switch in the timing for the actual mission, but that is distinct from the review. And when we have more, including on the mission, we will certainly let you know.

QUESTIONER: Apparently the Argentine government is going to go forward with some kind of public investment. Do you think that there is any chance that this investment is really treated like an investment and not as spending? I mean in a way the same condition that Brazil got?

MR. DAWSON: In terms of the accounting treatment? In terms of the treatment of Petrobras within the Brazil program? Is that what you are referring to?

QUESTIONER: Yes.

MR. DAWSON: I am not aware of that issue having come up in the context of the Argentine program. We can take a look at it. I have to confess, I do not have detailed information on that proposal that you indicated, although I have read what you have read, and again, I would say that perhaps one direct that question also over to our friends at the Bank.

QUESTIONER: Tom, I am interested to hear what the IMF has to say about the outcome of India's elections and the fall of the government there on the basis that the economic reforms were not trading down to help the poor. What is the IMF's comments on India?

MR. DAWSON: We obviously have seen the election results as everyone else has. I think I would refrain from trying to link the causation of the extent that was perhaps implied in the preface of your question. I would perhaps turn it around a little bit and indicate--and this will I think address your point--I mean we certainly agree and believe strongly that this was the case prior to the election as well, that the challenge looking ahead is to sustain both the high rates of growth and to reduce poverty, and the path for doing that, as we see it, requires a broad-based effort including in the areas of advancing tax reform, trade liberalization, agriculture and labor market reforms, and on the infrastructure side.

This year's interim budget, which is where we are at this point, indicated a willingness to tackle these longstanding plans, and I am sure the new government will take its own look at it, but pursue that course. I think I would leave it at that.

We would normally have had an Article IV team out there about at this time with the actual Board discussion coming up in the summer. Because of the electoral cycle, that was somewhat delayed, and we expect it will be taking place sometime right after the Annual Meeting, so that, in terms of what the mission--in terms of the Fund's sort of normal surveillance relationship. Of course, you only need to look at India's reserve figures, improved inflation performance and growth to have a sense that things have been moving in the right direction, although of course, the concern on the fiscal area has also been well noted by the Fund as well as other observers.

QUESTIONER: Tom could you give us an update on Iraq and where that stands as far as I think of the IMF's debt sustainability report, and does the June 30th hand over date have any significance for the IMF?

MR. DAWSON: I mean we have in fact submitted a debt sustainability analysis to the Paris Club, and I believe other--governments probably have as well. This is our normal relationship with the Paris Club. It is part of our job with them.

To sort of anticipate a question, you know, this is sort of a task we undertook at the request of creditors and the Paris Club, and provided an analysis of the profile and a variety of different scenarios. So it was not--there was not a recommendation, per se. It was in fact just to look at various scenarios.

I might perhaps briefly review the state of our relations with Iraq. I mean we have continued to work closely with the Iraqi authorities, officials, and meet with them fairly regularly outside Iraq to discuss policy and other matters. Quite a bit of technical assistance going on and so on.

I will give a couple of examples. We have helped work on a new central bank law, a new commercial bank law, a law governing budget matters which is called the Financial Management Law, and various of our departments have been conducting seminars with Iraqi officials to help rebuild or build institutions of economic management in Iraq. This work is in progress and continuing, even though we do not have a physical presence in Baghdad.

I think your question was the significance of the June 30th date. In a speech last September or October the Managing Director laid out a scenario for possible financial assistance to Iraq that indicated the possibility, once there is a broadly internationally recognized government, the possibility of post-conflict assistance to Iraq sometime in the second half of this year.

The June 30th date is obviously relevant because that is the point at which one starts looking for whether there is this broadly-recognized government. And I think we will need to make a determination on that, but that is a process that is taking place largely outside the Fund.

QUESTIONER: Just as a follow up, can you tell us anything about what conclusions you came to in that debt sustainability?

MR. DAWSON: No, I am sorry. I may not disappoint you in saying I am sorry that I cannot because--

QUESTIONER: Not that transparent yet?

MR. DAWSON: No, no, no. I was rather referring to your expectations. But, no, the information was provided both by creditors to the Fund on a confidential basis, compiled and then provided to the Paris Club on a confidential basis, and this is not the sort of analysis that we have in the past in other comparable situations made public.

I have no doubt that members of the press will seek to find information from various parties that may or may not have information on this issue, and happy hunting.

QUESTIONER: You already made a reference to the energy cost. Could you assess the inflational risks in the mind of IMF rising from the energy costs? And is this in part the economic outlook for the IMF so far?

MR. DAWSON: You're talking globally.

QUESTIONER: Sure.

MR. DAWSON: Okay. I addressed this question a couple of weeks ago, and I think IMF's Director of Researchg Raghu Rajan has addressed the question just in the last 24 hours or so in a speech in Asia, and I think I would just direct you toward that. I do not want to have to repeat the rules of thumb we have on impact of energy price rises, but I read this morning excerpts of Ragu's speech in [Tokyo], We can provide that for you, and I do not want to have to either test my memory or simply repeat what he said overnight.

QUESTIONER: I would like to know what will do the IMF in terms of continuing or not the program with Argentina if in the middle of June if creditors reject the proposal?

And second, if the IMF could be more specific about the threshold of participation that it is thinking, and if it is an issue of the Third Revision or the Fourth Revision?

MR. DAWSON: The first question is rather hypothetical, and you will have a chance to ask that question again when it is perhaps somewhat less hypothetical, so I think I will just duck at this point.

With regard to the issue of the threshold, which I take to mean the threshold for a debt offered to be accepted and so on, we--certainly progress in the debt negotiations is, as I indicated in my initial remarks, a key element of the review that will be taking place in mid June. That is a part of that issue, but we do not have a list that says--you know, there may be eight or nine issues, but we do not say that one through nine have to be done or number four does not have to be done. We are looking at the overall package, and indeed, the letter of intent specifies what those points are. So it is certainly an issue, but I am not going to get drawn into that it is a make or break issue because there are a number of issues that all have to be dealt with.

And there are judgments that will be made. Again, in a couple of weeks you will have a chance to ask that again.

QUESTIONER: Tom, I just want to clarify the debt sustainability assessment for Iraq. That has been given to the Paris Club and I gather the G-7?

MR. DAWSON: I cannot tell you about the latter part, but when it goes to the Paris Club Secretariat, it goes to the members of the Paris Club, which includes a long list of creditor countries, and I believe that in the spirit of transparency, we even have a Paris Club website, which I would direct you to in terms of members.

QUESTIONER: And will that assessment ever be made public?

MR. DAWSON: Ever is a long time, so I really do not know, but it is not the practice in cases like this for it to be made public. But at some point it is--you know, various conclusions that could be drawn from it are used in a fashion that becomes public as governments and the Paris Club take a view as to what sustainability should be. We are mere humble international civil servants providing an input to another organization.

QUESTIONER: And what do you mean by a broadly-recognized government? Could you please define that for me?

MR. DAWSON: I mean this is something that needs to be judged at the time. I mean the Fund legally makes its own judgment in that regard, but we make that judgment in an international context where others will be making similar judgments. So I think you should be looking not only at the Fund but elsewhere as to whether there is such a situation which is the trigger, as it were, for us to go forward with looking at the possibility of post-conflict assistance. It is not, however, in any sense a prerequisite of or requirement for our continuing to work with the officials that are there and trying to prepare the way for both--both in terms of providing technical assistance, which we are doing at the moment, and then down the road the possibility of financial assistance.

QUESTIONER: And would that program, that post-conflict assistance, would that require you to go to Iraq, or could you still organize that--

MR. DAWSON: I do not think it would necessarily require us to go to Iraq and--I am aware of situations in countries in the past where it has been difficult to get into the country and meetings took place in third countries.

The Fund does have at least one armored car I think now, but in the past we have had more than one armored car.

Thank you.

[End of press briefing.]




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