Transcript

Director of External Relations Department
International Monetary Fund
Thursday, July 21, 2005
Washington, D.C.

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.

I have a few brief announcements to make before questions. The Managing Director will be visiting Ukraine on August 4th and 5th for a series of meetings with the authorities, including the President. This visit is part of the Managing Director's ongoing visits to member countries, and Media Relations will circulate more details regarding press events when the visit nears.

Meanwhile, Deputy Managing Director Kato will visit Mozambique and Zambia between July 27th and 29th. A press release outlining the visit is on the table over here, and I believe you already may have copies.

I would like to remind everyone that the Executive Board informal recess will start with the week of August 8th. The last day of Board meetings would be Friday, August the 5th. I expect to have another briefing before the recess. I believe it will probably actually on Wednesday, August the 3rd, because I expect to accompany the Managing Director to Ukraine.

Today the IMF Book Forum series here at Fund headquarters will focus on an IMF occasional paper entitled "Central America: Global Integration and Regional Cooperation." And, obviously, it relates to the Central American Free Trade Agreement as well, which is certainly topical in Washington at this point. The forum will include economists from the Fund's Western Hemisphere Department, along with non-Fund experts—the Guatemalan Ambassador to the U.S. Guillermo Castillo Villacorta, and Nicaragua's Ambassador Salvador Stadthagen, and Peter Hakim, the president of the Inter-American Dialogue. Additional information is on the website.

Lastly, online press registration for the 2005 Annual Meetings of the Fund and Bank will open tomorrow at www.imf.org. The deadline for submitting online requests for credentials is September 16th, and journalists requiring U.S. visas are urged to register soon to avoid delays or possible entry problems. To remind, the meetings are scheduled for September 24th and 25th here in Washington, D.C.

With that, I will be happy to take any questions that you may have.

QUESTIONER: What is the IMF's reaction to the news today of China revaluing the renminbi? Do you think it is a large enough adjustment? And do you believe this will contribute to reducing global imbalances that the IMF has basically repeatedly highlighted?

MR. DAWSON: The change in China's exchange rate regime announced today represents a move in the direction of greater exchange rate flexibility. Greater flexibility is very much in China's best interest as it would provide more room for monetary independence, enhancing the government's ability to manage the economy. We would encourage the authorities to utilize fully the scope for flexibility in the new exchange arrangement. We are ready to work with the authorities on the continuing evolution of the exchange rate system

I would note we have made clear the view that a move to a more flexible system was indeed in China's interest, and I think we have been making that view known, I think, for a couple of years.

I would also note two things: that the Chinese annual Article IV consultation discussion in the Executive Board is scheduled for just before the Board recess, so you will expect that the institution will be taking a look at the state—as part of our surveillance responsibilities, as the Chinese economy at that point. And as is usual, you can expect there will be a Public Information Notice published shortly after the Board meetings. And I do not think I can go into much more detail on the announcement since it just came out about four hours ago.

QUESTIONER: The 2.1-percent adjustment, is that basically in line with what the Fund has been recommending—

MR. DAWSON: I do not think it is appropriate for me to go into that sort of analysis. You know, we have made the view known and the Chinese authorities have, I think, accepted it for some time, both our technical analysis and our view on the need for a more flexible system. The authorities have accepted that view and have taken a move that I made a statement on. As I indicated, we are ready to work with the authorities on the continuing evolution of the exchange rate system.

QUESTIONER: Could you update us on what is going on in the meetings between (the Argentine official) Mr. Nielsen and Anoop Singh?

MR. DAWSON: I certainly can confirm that the meetings are ongoing, but I do not think it is appropriate for us to discuss the meetings while they are going on. The team led by Secretary Nielsen arrived this week and has begun their discussions. We put out a statement on June 29th and then followed with a Board meeting last week that was required under our exceptional access procedures. And I would also take note that the Argentine authorities did consent to, and now the Article IV consultation report which was discussed on June 20th has now been posted on the Fund website.

I would also note, for those of you who want to go back and check your web access, that there is a spectacular picture of Secretary Nielsen on the BBC World News site this morning. It looks like he is dressed for winter with quite a dashing little beret on. The only problem is the BBC refers to him as "Gustavo Nielsen," so I think a correction is in order. But take a look at the picture. He really looks quite a character.

QUESTIONER: With the World Bank announcing that they are going to make a US$500 million loan to Iraq, is the IMF any closer to any sort of arrangement with Iraq?

MR. DAWSON: Well, we indeed have been in discussions with Iraq. We have what we refer to as an emergency post-conflict assistance program underway, and that has always been envisaged as something that would then lead to the possibility of discussing a stand-by arrangement late in this calendar year, and that is precisely the schedule that we are on. So we remain on track with the schedule that was essentially outlined about 18 months ago in terms of the timing of our consideration for a possible program.

QUESTIONER: A follow-up on Iraq. The G-8 communiqué particularly noted that they wanted more—I am trying to think of the wording of it. But, anyway, wanted basically the IMF and the World Bank to play a bigger role inside Iraq. I cannot remember exactly what the words are, but it was something to that effect. Is there any sort of idea of if the IMF is looking to go back into Iraq?

MR. DAWSON: I do not think it is appropriate to discuss those sorts of issues. I would note, though, that there was a donor conference, I believe this week, in Amman, Jordan, in which we participated. And we remain quite closely engaged with the Iraqi authorities on both the present emergency post-conflict assistance program, the possibility of a stand-by, which we have announced is what we are aiming toward, as well as a variety of technical assistance that we are providing to the authorities in conjunction with other organizations, including, in particular, the World Bank.

QUESTIONER: The framework of the negotiations with Argentina that have started is the conclusion of the Article IV?

MR. DAWSON: No, the Article IV was concluded on June 20th.

QUESTIONER: I know, but, I mean, what was said there and what the—

MR. DAWSON: Oh, I see what you mean.

QUESTIONER: [inaudible] the parameters of the negotiations?

MR. DAWSON: No. I think that the Article IV certainly could be viewed as--the document itself as reflecting the staff's views. We, of course, had a Public Information Notice that gave a sense of the Board discussion, and the authorities, with their Executive Director Mr. Torres, have made clear their position. So I think by looking at all of that you can see the sorts of issues that are on the table.

QUESTIONER: Is there a Board date yet for Zimbabwe? The Zimbabwe central bank today said they've raised their repayments to the Fund. Can you confirm—

MR. DAWSON: The present timetable for the consideration of the Zimbabwe case has been sort of a six-month timetable, and the last Board discussion was on February the 6th, I believe. I do not have the precise date here, but toward the middle of February. It happens that that six-month period will come during our Board recess, so I would not necessarily expect our Board discussion will happen before the Board recess. It will happen shortly thereafter.

QUESTIONER: This is on Yemen. I do not know if you have noted, there has been violence and people killed and injured with regard to protecting fuel price hikes, which, according to our story, is part of the reforms launched in '95 and backed by the IMF. Is this what the Fund has been urging?

MR. DAWSON: First of all we obviously deplore any loss of life. I am aware of that particular story, but I do not have any additional information and, of course, there is no Fund program with Yemen. But I would have to get back to you in terms of what the state of play is there. But I did take note of that story.

QUESTIONER: Once again on Argentina. You mentioned that the Article IV documents reflect the issues that are on the table, and today the central bank announced that there are probably or may be some kind of problems with inflation targeting and inflation rates. Can you elaborate on that? Is that going to be discussed with the staff and the Argentine authorities?

MR. DAWSON: I did note, in fact, the central bank's statement this morning. I do not think it is appropriate for me to comment on their statement. I think, though, that if you look at the Board discussion, both the Article IV staff report as well as the Public Information Notice, you will note that it is one of the issues that is covered there. But that is normal. I mean, that is part of what our responsibility is.

QUESTIONER: On the question of the Chinese currency, in the IMF's discussions over the years has there been a concern raised about an overly gradual response perhaps being counterproductive? And how does that—how does the degree of the change announced—

MR. DAWSON: I do not think it is appropriate for me to answer that at this point. It was announced about four hours and 15 minutes ago, and we will be looking at it now, and the time to get our more considered view will be when we have had the chance to both analyze it and have our Article IV discussion, which is in about two weeks. If there are other developments, we, of course, would be in a position to respond. But I think at this point, that is pretty forthcoming on our part.

QUESTIONER: This is like a ping-pong. Again on Argentina, is the IMF going to send a mission or something to Buenos Aires?

MR. DAWSON: I think at this point the stage is to have the discussions here, and what the next stage will be for the discussion of a possible program, we will decide at the end of that. That is often what happens, but I do not have a sense of timing. And it is indeed, as I say, coming up to our Board recess, so it might be a little bit after the recess.

QUESTIONER: Does that means that during the recess there is not going to—

MR. DAWSON: There may be, maybe not. But in terms of what is coming out of here, I have no sense of something particular happening, and just as a practical matter, things tend to slow down a bit during those couple of weeks. I certainly hope they are.