Transcript of a Press Briefing by Masood AhmedDirector of External Relations Department
International Monetary Fund
Thursday, June 1, 2006
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MR. AHMED: Welcome. I am Director of EXR Masood Ahmed, and this is our regular press briefing.
On the announcements, first a few things on travel. Travel by the Managing Director: the Managing Director will be in St. Petersburg on June the 10th to attend the G-8 Finance Ministers' Meeting, and then he is going to be in Australia on June 13th and 14th, and then in New Zealand on June 15th and 16th. In both places, he will be meeting with authorities, but also there will be a series of press and other events. We have press releases on both to issue. I should point out to you that the trip to Australia is the first visit by the Managing Director of the Fund since 1998 and to New Zealand since 1988.
Then he will go to Yerevan in Armenia on June 17th and 18th, where in addition to having a bilateral visit to Armenia, he is going to spend a day participating in a meeting of the 12 countries that are part of the IMF Executive Board constituency represented by the Netherlands.
Second, I would like to just let you know that we are releasing today a Public Information Notice and a staff paper on the Fund's Executive Board's recent decisions relating to the Fund's Fiscal 2007 administrative and capital budget. The Board also discussed the indicative administrative budgets for the next two years which is Fiscal 2008 and Fiscal 2009. This is the first time that the Board has covered multiple financial years in the discussions.
Finally, I would just like to mention to you that the online registration for the Singapore Annual Meetings will open on June the 9th. Even though the Annual Meetings are in September, it is not too early to register.
I just want to also put two dates on your calendars. In September, for planning purposes, we plan to release the Global Financial Stability Report in Singapore on September 12th and the Global Forecast of the World Economic Outlook on September 14th. Again, full details on the press events in Singapore will be posted in the coming weeks on the IMF's web site.
Our next briefing will be in the week of June 19th just to give you a head's up on that.
I am going to turn now to questions. As before, it would be better if you could identify yourself and the agency with which you are affiliated.
QUESTIONER: Do you maybe know when the Turkey loan review is coming up on the Board?
MR. AHMED: You know the mission was concluded successfully. There was a press statement that was issued at the end of the mission, I think on May 22nd. There is an agreement that the mission reached ad referendum with the government. On the Fund side, that agreement now has to be approved by Fund Management and by the Executive Board. On the side of the government, there are a few items on the budgetary side and on policy changes which they are planning to implement. Assuming that those steps are taken on the timetable that was discussed with the mission, the Executive Board could meet to consider the completion of both the third and the fourth reviews sometime in July.
QUESTIONER: On this discussion, the Board's discussion of the budget and you said it is the first time they have done multiple years which I assume has to do with income issues, has there been any update on the decision—was it a month and a half ago—on when you moved the $8.7 billion in reserves and would start investing in bond markets? Has there been anything on that, any results yet?
MR. AHMED: There is nothing new that I have to report on the process of how those reserves are being invested, and I will make sure that when we do have something we let you know about it.
The other thing that I just wanted to mention is this notion of looking at multiyear budgets is not necessarily linked with the income issue; it is linked with the fact that the Fund is beginning to move towards how to have a more tightly managed budget over the medium term. It just is a better way of planning the budget cycle as well.
QUESTIONER: Actually, two quick questions, one on the budget which was released, I am not sure what that suggests, but is this something that could change based on any findings of the committee that was announced two weeks ago, the one featuring Mr. El-Erian and Mr. Greenspan?
And secondly, with the visits to New Zealand and Australia, knowing that the Managing Director hasn't visited in quite a bit of time, is his travel now efforts to gain support for the medium term strategy, or are there other reasons why he would be traveling there?
MR. AHMED: On the question of the link between the budget and this committee, the committee, as I mentioned the last time we had a press briefing, is focused on looking at the options for generating sustainable long-term income for the Fund. It is going to look at the income side. It is going to look at all the options for doing that. What this is doing is looking at how we spend our administrative budget, and this effort is basically part of an ongoing effort simply to ensure that we both have a framework within which we look at individual year expenditures and that we scrutinize those expenditures because we have an accountability as a public institution to make sure that we provide value for money for our membership.
On your second point about New Zealand and Australia and the motivation for those trips, I think the Managing Director is traveling quite a lot during this month. As I had mentioned, he has just come back from a visit to Austria, Singapore, and Malaysia, and now he is going to be traveling to these countries. It is part of the bilateral meetings which he does from time to time. There are country visits. But there is an effort to go and consult widely with the membership on the different elements of the medium term strategy and to ensure that those views of the membership are taken on board in terms of how we move forward with the design and delivery of that strategy.
QUESTIONER: One question on the budget, is there anything in the budget—I am sorry, I haven't seen it because it just came out now, and I was on my way here. Is there anything in the budget that shows how the Fund is kind of saving, considering the income position? Is there a shift towards more savings in any way, lessening some areas, increasing in others? Anything you can say?
MR. AHMED: First of all, I should reassure you that the reason you haven't seen it is because we are only putting it out today. So don't worry about the fact that you have been away.
On the substance of what is in it, the headline numbers are that we project that the budget is constant in real terms in the first year, and then there is a decline of one percent in each of the subsequent two years in real terms. There is within that, substantial reallocations planned to ensure that the elements of the medium term strategy are reflected in the design of the budget, but there is also a commitment to deliver on that strategy over those periods within the overall budget. The rationale for it, as I said at the last briefing that we had, is simply that as a public institution, whether or not we have an income issue, we need to continually make sure that the money we spend provides value for money for our members.
QUESTIONER: Just to stay with the subject and since we haven't seen it, what kind of substantial reallocations are you talking about there? Can you give us an example?
MR. AHMED: I am not in a position to give you examples now, but I think I am happy to once you have had a look at the document. If you have any further queries on it, I will be able to give you more details.
QUESTIONER: I have two questions. The first one is regarding Italy. Do you have any idea of when there will be the summer mission of the IMF to Italy, and do you consider that the new Italian Government has to address its financial problems with a financial maneuver or a supplementary budget?
The second question is regarding Iraq, and I will ask it after your answer.
MR. AHMED: Okay, so you have a two-part question for Italy and then a supplementary come back. On Italy, just on the logistics, as you hinted at it, mid-year visits are customary in the Fund's relationship with Italy. They have been for a while. At the moment, the staff are in contact with the authorities to try to figure out a date that would be convenient to undertake the 2006 mid-year visit. So as soon as we have a date that we have agreed, we will make sure that we put it out.
In terms of whether or not there is a need for a supplementary budget that you asked, well, as you probably know, the new government has appointed a team to examine public finances, and we don't want to be in a position of prejudging the results of that undertaking. What I can say is at the time of the recent WEO, we projected a deficit of four percent of GDP, and the more recent data that has come in tended to shift the balance of risks toward a higher deficit. We continue to believe that a restructure—that achieving a deficit in line with the authorities' commitment under the excessive deficit procedure is warranted, and based on our projections, we think this will require additional measures. Whether those measures are incorporated in a supplementary budget or enacted in an alternative manner is something the government has to decide. So we don't have a view on what is the best way in which to do it, but we do think there is a need for additional measures.
You had a supplementary question on Iraq?
QUESTIONER: Yes, I would just like to know if the IMF has already had any kind of contact with the new Iraqi Government or if it plans to have contact.
MR. AHMED: We had discussions during the spring meeting. We are in contact with authorities in Iraq, and we will continue to be in contact with them. So that is just an ongoing process.
QUESTIONER: To follow up on that, currently, there is no mission in Iraq. Is that still correct, or are there plans to have people on the ground in Iraq any time in the near future?
MR. AHMED: The IMF has no current plans to have a resident representative of people on the ground in the near future.
I have one question from the Media Briefing Center which I would like to answer as well, and I will read the question out. It says: Have you have received any requests from Bolivia to sign a new standby agreement? The Finance Minister said a few weeks ago that the government was considering asking the IMF for new credit. What kind of policies in the oil and gas sector would the IMF require to sign such an agreement?
I just want to answer that. As far as I am aware of it, and I will just double-check it to make sure that I am entirely up to date on it, we have not received any such request. A mission, the IMF mission was there last week. That is why I just checking my notes, and we will obviously update Management on our observations of the economy once they are back, but we received no such request.
QUESTIONER: Earlier you were talking about the Managing Director traveling a lot, and you said he was consulting widely with members about the medium term strategy. On the issue that was so highlighted at the spring meeting about having a different approach to addressing the global imbalances, how far along is the Fund with that?
MR. AHMED: Well, I should say what we have done since the Spring Meetings, I just want to point you to the Managing Director's speech in Singapore last week which sort of gives you an update on it, and I am happy to give you points from that.
First, what I want to say is that we are now clear that the first of these multilateral consultations indicate there is a particular need to focus on the question of the economic imbalances that you referred to.
Secondly, the process of how we are going to go about that is something that we are now discussing both with the potential countries that would be involved in it and we will be obviously taking that to the Board. Until such time as we have gone through that process, I won't have anything more to say to you on exactly what that process will be and which countries are involved.
Third, something that the Managing Director also said in response to the question about what is the timetable for this work in terms of in particular whether or not it can be completed by the time of the Annual Meetings, is simply to reiterate that the important thing is not whether or not this process is completed by September or October, but that it is done right.
So, as far as we are concerned, this is a coordinated consultation process that affects a number of countries, addressing an issue which took quite a long time to build up and which will take time to resolve. So, while we will make progress—we intend to make progress on this in the coming months, we do not see Singapore as a deadline of any kind for completing it.
Are there any other questions?
If not, let me just say that we will embargo this until 11:00 Washington time, which is 1500 GMT, and we look forward to seeing you at our next briefing. Thank you very much.
[Upon which the press conference ends.]
IMF EXTERNAL RELATIONS DEPARTMENT
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