Transcript

Washington, DC
Thursday, October 6, 2011

MR. HAWLEY: Good morning. My name is David Hawley, and welcome to another of our regular press briefings from the IMF. As usual, this briefing will be embargoed until 10:30 Washington time, that's 1430 GMT. Before I take questions, I'll run through a few items about management travel.

As we speak, the Managing Director Christine Lagarde is in Berlin where she is joining the annual meeting that the German Chancellor holds with the head of IFIs, international financial institutions. We expect that there will be a press conference at about 5:00 p.m. local time in Berlin which will feature these heads of institutions and the Chancellor. On October 8, the Managing Director will have a meeting in Paris with France's President Sarkozy. This meeting will discuss global economic developments and issues for the forthcoming G-20 meetings and also the October 14 meeting in Paris of ministers of finance and central bank governors. She will in fact attend that meeting on Friday, October 14, of these G-20 governors and ministers.

Finally, in respect to travel by the Managing Director, she will attend the ministerial meeting of the Gulf Cooperation Council in Abu Dhabi on October 22. Concerning travel by other members of management, I'll note that Deputy Managing Director  Naoyuki Shinohara will attend the Conference on Sustaining Development in Low-Income Asia in Tokyo and that is on October 11 and 12. On October 12 and 24, Mr. Shinohara will go to Seoul for a World Knowledge Forum where he will join a panel discussion on current issues in emerging Asia. Deputy Managing Director Min Zhu will open the fourth Regional Technical Assistance Center in Africa, this is known as AFRITAC-South, in Mauritius, and that will be on October 17. Finally, on the time table for releasing our Regional Economic Outlooks, on October 13 in Tokyo we will releasing the Regional Economic Outlook for Asia and the Pacific, then on October 19 will release the Regional Economic Outlook for Africa in Nairobi and on October 23 in Dubai, the outlook for the Middle East and central Asia. Thank you very much. With those, I'm ready for questions.

Questioner: The IMF’s European Department director, Antonio Borges, made some comments yesterday about a concept of buying bonds and then there was a later clarification. I'm not exactly clear whether this idea is just something that's floating around in Borges's mind or whether there is something more official on paper that staff had prepared. Lagarde had mentioned something a couple of weeks ago that seemed very similar though it was clear it didn't mention board members. Can you define in what gestation stage this idea, please?

MR. HAWLEY: I've got nothing really to add to the remarks that were made yesterday where we made clear that the Fund only lends its resources to its member countries and cannot use these resources to intervene in bond markets directly and we are not contemplating any market involvement with the EFSF.

Questioner: Just a couple of follow-up questions for due diligence you must understand.

It seems then that Borges was a little off the reservation so to speak. Is that the case? Secondly, you say it can't lend directly. Under the current Articles of Agreement can the Fund lend to say a regional institution that could then of its own accord buy bonds?

MR. HAWLEY: There are two questions there. Mr. Borges made clear what he meant by the reported remarks and I've just repeated those. In respect of alternative lending modalities since that's what I think you're raising, any alternative to what we do now would require a different legal structure and the use of different sources of financing. And to make the point completely clear, we have not discussed such issues with our membership.

Questioner: To follow-up on that, when you say a different legal structure, does that mean, I can think of a couple different things here, but let me just put two on the table and you can clarify what you mean by legal structure. Are you saying that the board could vote to create a new legal facility that could then with alternative funds lend to a regional facility? Or are you saying when you say a new legal structure that it would require changes to the actual bylaws of the IMF?

MR. HAWLEY: That's a completely hypothetical question.

Questioner: But it's one that you all are posing when you say a different legal structure. So I'm asking you to clarify what you mean when you say legal structure.

MR. HAWLEY: The legal structure of the Fund is both the Articles of Agreement and the international law that arises from them and I have no further clarification.

Questioner: Didn't he [Mr. Borges] mention yesterday that the Fund would then require a special vehicle or something like that? Has the Fund ever done anything like that, using a special vehicle to intervene on markets?

MR. HAWLEY: I don't have, I'm afraid, information about special-purpose vehicles' history of the Fund. I can get back to you on that.

Questioner: Are you going to participate in the next program for Greece and how?

MR. HAWLEY: There's a mission on the ground at the moment conducting the fifth review. The discussions with the authorities are ongoing. We expect to conclude that mission soon. So it's premature at this point to go beyond that.

Questioner: Do you have any idea when [IMF Greece mission chief Poul]Thomsen and his team are coming back?

MR. HAWLEY: The mission which is on the ground is concluding soon. Soon often means a matter of days, and that's as much as I have on a firm timetable at the moment.

Questioner: Why the lack of agreement? What is the problem?

MR. HAWLEY: There is not a problem of a lack of agreement because there's a mission on the ground conducting discussions with the authorities. That's the normal course of events in the life of a program.

Questioner: Can you tell us if they agreed on anything in Athens?

MR. HAWLEY: We typically do not describe the progress at negotiations until the discussions are complete. I'm not going to depart from that practice today.

Questioner: To follow-up on Greece, a few weeks ago we had had a date for a likely board meeting for the next Greek review. I know a lot has happened since then. But do you have a new tentative more or less date for the board?

MR. HAWLEY: I don't have a date for the board.

Questioner: Two weeks ago I believe Madam Managing Director mentioned the possibility of the IMF doing short-term liquidity funding for regions. Is that another hypothetical or is that something that the IMF is actually working on?

MR. HAWLEY: I'm not quite sure about the context of the remarks that you say she made so I don't have an immediate answer to that. Can you remind me of exactly what she said?

Questioner: Perhaps my colleague can help me. She was there when she said in response to a question about short-term liquidity to the European Union, and I'm paraphrasing here, she said, yes, perhaps we need to create a lending facility for regions rather than just countries.

MR. HAWLEY: I don't have any further elaboration today.

MR. HAWLEY: I got a further question online referring to debt sustainability of Greece. What conclusions can be drawn from your current review? Are you projecting that there will be a larger private sector involvement? Our basic position on that is that we support the financing agreement reached at the July 21 summit. The combination of private-sector involvement and enhanced official-sector support can help to significantly reduce Greece's market financing needs and can notably reduce the interest burden from the public debt. With discussions however on PSI underway between the Greek authorities and creditor representatives, I don't have a further comment on the composition.

Questioner: What is the percentage of private-sector involvement?

Is it 21 percent according to the agreement of July 21 or it's going to be more?

MR. HAWLEY: We support the financing agreement reached on July 21.

Questioner: So if this agreement changes, you are going to support it again?

MR. HAWLEY: If there a change, we'll come back to you. Our current position is that we support the agreement reached on July 21.

Questioner: Yesterday Mr. Borges made very clear that there had been no requests other than already outstanding requests by Euro Zone member countries. He did not say whether there had been a request by a region, Europe as a region. Can you say whether there has been a request from the region?

MR. HAWLEY: We've got no further requests from Europe.

Questioner: Could you give us a comment on the ECB decision today not to cut rates while this was one of the recommendations of the IMF?

MR. HAWLEY: We share the ECB's concern that there are severe downside risks to the outlook as a result of financial tensions and thus we fully support the liquidity extension announced today. With the outlook risks persisting, we believe there is currently scope for a reduction in policy rates as well.

Questioner: I'll change regions. Egypt had declined a loan or changed its mind on a loan. It looks like things may be changing. Have you had any request from Egypt during the discussions during the Annual Meetings? And when is the mission going to the field?

MR. HAWLEY: We remain in close dialogue with the authorities and are committed to continue to provide support through policy advice and technical assistance. We have not received a request from the authorities for a Fund arrangement. But I should note that in the context of the dialogue we expect a staff team to travel to Cairo in the next few weeks to take stock of developments in the economy.

Questioner: First Deputy Managing Director Lipton has been on board for a number of months now. Do you have any idea when we might be able to meet him as the press?

MR. HAWLEY: I'm sure that he will be available to the press at the earliest opportunity convenient. I'll follow-up on that.

Questioner: Could you give a status report on the MAP that the IMF is preparing for the G-20?

MR. HAWLEY: We are continuing our evaluation of the imbalances and of progress toward external sustainability as well as an updated assessment of the global outlook and a review of the G-20 policy implementation vis-à-vis their commitments. This will lay the groundwork for the 2011 Action Plan which is to be announced at the Leaders Summit in Cannes in November.

Questioner: You said before that Mr. Thomsen and his team is coming back or are finishing in a few days. Can you tell us, can we say that they are going to finish during the weekend or next week? When you are saying a few days, do you mean.. –

MR. HAWLEY: A few days. Soon. I can't give you a date certain.

Questioner: They are there 2 weeks. The technical team is in Greece more than a month.

MR. HAWLEY: Let me remind you of what happens on a lot of missions in all countries. The exact length of a mission is not something that you can say ex ante, you can have a target and we have a target for finishing these discussions soon. There is nothing unusual at this stage of a discussion me not being able to say exactly on what date a mission will conclude. I've been asked by Nicoletta Nencioli of ANSA to repeat my comments on the ECB, so with your indulgence I'll do so. We share the ECB's concern that there are severe downside risks to the outlook as a result of financial tensions. Thus we fully support the liquidity extension the ECB announced today. With outlook risk persisting, we believe there is currently scope for a reduction in policy rates as well.

Questioner: I have another question. Can you make a comment on the reports that there are disagreements between the members of the Troika on the Greek problem?

MR. HAWLEY: No, I cannot make comments on those reports. If there are no further questions, I'll conclude. Thank you very much. I'll remind you of the embargo which is 10:30, and we'll come back to you on a couple of points to clarify. Thank you very much.

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