Transcript of a Press Briefing by David Hawley, Deputy Director, External Relations Department, International Monetary Fund

Washington, D.C.
Thursday, January 26, 2012
Webcast of the press briefing Webcast

MR. HAWLEY: Hello everyone, and welcome to another of our regular briefings for the media. I am David Hawley, Deputy Director of the External Relations Department at the IMF. This briefing as usual is under embargo and the embargo is 10:30 Washington time and that's 1530 GMT. Before going to your questions, let me as usual make a few announcements mainly about management travel.

Managing Director Christine Lagarde will travel to Davos to attend the World Economic Forum from January 27 to 29, and Deputy Managing Director Min Zhu is also attending the World Economic Forum. After Davos, I expect that Madam Lagarde will travel to Brussels for the European Union Summit, which is on January 30.

The next week she has a trip to the Middle East. She will visit Tunisia on February 1 and 2, and Saudi Arabia on February 3 and 4. This is her first visit to the region as Managing Director of the Fund and she will meet leaders in both countries as well as other interlocutors. This is an opportunity for her to hear their views and concerns at this time.

Deputy Managing Director Min Zhu will be in Israel from January 30 through February 1 to speak to a conference on the global economy on February 1. For further details on that please contact Media Relations.

Deputy Managing Director Shinohara is in Mumbai on February 1 to attend an international research conference at the Reserve Bank of India, and he then travels to Japan for a conference on tax issues on February 3. Again, if you need more details, please follow-up with Media Relations.

One final housekeeping note, on January 30 at 6:30 in the evening Washington time, Anoop Singh, the Director of the Asia and Pacific Department, will hold a press conference on the outlook for Asia. The conference will be webcast life. For more details, please contact Media Relations. With that I'm ready for questions.

QUESTIONER: I wanted to ask for an update on Ukraine. I understand a Ukrainian delegation visited recently. I'm interested in who talked to them, what about, what was the result and maybe there were other contacts. I understand there may have been other contacts after that.

MR. HAWLEY: Yes, in fact, there are developments today. Managing Director Christine Lagarde met today in Zurich with Prime Minister Azarov to discuss recent economic developments in Ukraine. They discussed key policies and reforms needed to ensure the country's sustainable economic growth. They agreed to pursue an active dialogue through technical teams in the period ahead. And to complete the picture because you alluded to it, there was a meeting here in Washington on January 24, but it's today's development that I underline for you.

QUESTIONER: What is the next step then? If they agreed to exchange technical contacts, technical meetings, technical teams, whatever it is, when are we expecting any further movement?

MR. HAWLEY: I don't have a timeline on what the follow-up will be.

QUESTIONER: What policy action message is the IMF giving to emerging markets including China to cope with the spillovers from the Euro Zone debt crisis and join the international efforts to strengthen the IMF's firewall to the G-20 deputy meetings in Mexico City and other global platforms? Secondly, there are some reports, differing reports, that mention that the IMF and other Euro Zone important players including Germany that you have different preferences and assumptions for the scale of ESM, like €1 trillion or €500 billion or €750 billion. Do you have some comments on that?

MR. HAWLEY: There are two questions there. In respect of G-20 emerging economies, the immediate policy priority is to ensure a soft landing as domestic growth and demand from advanced economies moderate. Monetary policies can be eased in economies whether as diminishing inflationary pressure, but there need to be sufficient safeguards to ensure against overheating in some sectors. Social spending can be increased in economies where inflation is low, public debt is not high and external surpluses are large and China is among those countries. Policy space is more limited in those economies that suffer from both relatively high inflation and public debt, warranting a more cautious stance toward policy easing. As you know, the Fund issued its update in the World Economic Outlook so there will be further discussion of those issues in that report.

You also raised the question of the ESM. I'm sorry. I struggle with the acronyms. I'd refer you to what the Managing Director said on this issue when she spoke in Berlin earlier this week. She said that, "Adding substantial real resources to what is currently available by folding the EFSF into the ESM and increasing the size of the ESM and identifying a clear and credible timetable for making it operational would be of great help" and that is our position on that question.

QUESTIONER: What is the IMF's position on the Greek high-rate labor market? Did you ask for any changes on the salaries of the private sector?

MR. HAWLEY: As you know, a mission has just started working in Athens to begin discussions on a new arrangement at the request of the authorities. It's very early days in those discussions so I don't have any comment at this stage on specific policy measures. It's simply too soon given the state of discussions.

QUESTIONER: If I may follow-up. I read in one of your papers, and I can give it to you, that 13th and 14th wages are legal obligations of the private sector even though these have been eliminated in the public sector: "Paying the wage bill in 14 installments is not a distortion by itself, making this obligatory introduce rigidities." When you say rigidities what do you mean?

MR. HAWLEY: I will have to come back to you on that specific point.

QUESTIONER: I wanted to follow-up on your answer to see about the emerging markets. We've heard that in the WEO presentation also, that the countries that have the policy space can ease their policies somewhat. I think the Ukrainians keep trying to say that this is where their country is. So I'm asking if the IMF agrees with that, if the IMF sees any policy space in Ukraine at this point.

MR. HAWLEY: A key policy issue from our perspective, is strengthening public finances in Ukraine and that is an aspect that can be covered in the technical discussions that I mentioned earlier.

QUESTIONER: Two questions. The first one, is there any comment from the IMF about yesterday's announcement by the Fed planning to keep low rates until 2014? The second one is apparently yesterday the new Spanish minister has met with some IMF officials in Madrid. Can you elaborate a little on that issue?

MR. HAWLEY: On the first question on the U.S. Fed, we welcome the measures announced yesterday. On Spain, a small team visited Spain between January 20 and 25 for what is a regular staff visit. In general, the IMF conducts these visits at a midpoint in the Article IV cycle so that it's a regular, routine visit. We postponed a visit because of the election cycle. We haven't issued a statement on the visit and that is our normal practice for these routine staff visits.

I'll take a question if I may from the Media Briefing Center on Dominican Republic.

The question is, "Does the technical mission of the IMF come in February or before the ending of this month and at what time? What is the current situation on the stand-by arrangement with the IMF?" The Fund continues to maintain a close dialogue with the authorities in the Dominican Republic and to work on policy and technical issues related to the program. We've been exploring options of program extension, for example, for another 6 months, but in response to Ms. Acosta's specific question, we don't have a specific date for the next mission.

QUESTIONER: On Greece, in its role as observer of the Troika talks with Greece, has the IMF, and I'm talking strictly about the IMF's work here, conducted any technical analysis or new draft debt sustainability analyses of the latest developments, number one? And two, when the IMF talks about public creditors in Greece, do they include the ECB? Is that what you mean? Is the ECB one of the public creditors that you were talking about?

MR. HAWLEY: I don't have an answer on your first question about our latest work on that technical issue. I'll come back to you if there is something fresh to say. Yesterday we issued a clear statement on Greece and you saw it and I'll repeat it for the benefit of those who didn't hear it, "To ensure debt sustainability for Greece, it is essential that a new program be supported by a combination of private-sector involvement and official-sector support that will bring debt down to 120 percent of GDP by 2020. The Fund has no view on the relative contribution of private-sector involvement and official-sector support in achieving that target. And in line with this view, the Fund has not asked the ECB to play any specific role."

QUESTIONER: I appreciate that. I don't want to wrongly make assumptions about what the IMF is defining when it uses particular terms, so I think one could assume that you are saying the ECB is a public creditor in that situation from the phrase that you just read and I don't want to be again wrongly assuming something. So I'm asking the IMF to define its terms when it says public creditor.

MR. HAWLEY: I'm sorry, I hadn't understood your question.

QUESTIONER: The statement you just read was the statement that the IMF emailed out and you said that the IMF is not taking any view on how the Troika members, all the parties, private and public creditors, should meet any potential funding gap. You haven't used the words funding gap, but you did talk about private and public creditors. Then you said in line with this view the IMF has no view on what role the ECB should play. I'm saying that one could assume that when you say public creditors and you talk about the ECB, you're saying that the ECB is one of the public creditors you're talking about. I don't want to wrongly assume that. I'm asking you to confirm that my assumption based on your email is correct.

MR. HAWLEY: Our email spoke of official-sector support. It didn't speak about public creditors. And I'm not going to parse the statement further. I think it speaks for itself.

QUESTIONER: Madam Lagarde yesterday and today talked again about the public creditors. When she's talking about public creditors, she means who? ECB? Somebody else?

MR. HAWLEY: I've got nothing to add to the statement that we issued yesterday.

QUESTIONER: David, I hear you saying now three times that you have nothing further to add so I assume that there's going to be nothing further to add, but I must protest on principle that the IMF cannot define its terms when it talks. IMF has a book, a glossary, of terms when it defines whom and what it's talking about. And so I just again object on principle that the IMF and the spokesman for the IMF cannot define who are the "public creditors" and who are the official creditors. I think it's a pretty straightforward question.

MR. HAWLEY: Thank you for the comment. Are there any other questions?

QUESTIONER: You have something to follow-up, how much new lending the resources is aiming to get from the major emerging markets, the BRIC countries, in the coming months?

MR. HAWLEY: We have announced what we believe is a need for an increase in IMF lending resources of $500 billion and we haven't described the composition of that.

I'll turn to on-line questions, and the question is whether the IMF will maintain normal relations with Uhuru Kenyatta in his role as Deputy Prime Minister in Kenya and does the Fund have a comment on Kenyatta's resignation today as Finance Minister following his indictment this week by the ICC on charges of crimes against humanity. We don't have a comment on the ICC. Our relations are with governments, countries and not individuals and the Fund has good relations with Kenya which I'm confident will continue.

QUESTIONER: Can you give us an update on the process of the Fund seeking additional funding support for this new emergency pool? I think that Lagarde has said that this has been going on now for a number of weeks. What's the general feedback? Are the members willing to support based on certain conditions and what conditions are those?

MR. HAWLEY: Right now we're exploring options and consulting with the membership. I've got nothing to add to that at the moment. As this develops, we'll keep you up to date.

QUESTIONER: Just now you mentioned that the IMF welcomes the latest announcement from the U.S. Fed. You have a particular reason to welcome that announcement. Do you have anything to add to that?

MR. HAWLEY: It's appropriate for monetary and economic conditions in the U.S. at this juncture. If there are no more questions, I'll wrap up.

QUESTIONER: Have you got any idea when Thomsen is coming back?

MR. HAWLEY: No, I don't have a date for the conclusion of the mission.

QUESTIONER: Also, sorry to come back again, but can you find out who are these public creditors?

MR. HAWLEY: I'll come back to you on that.

QUESTIONER: Can we get an update on the hacking of the IMF servers I think almost a year ago now if not longer? Has your security finished its assessment? Is there any sort of final determination? Is an investigation ongoing? Have you guys lost leads? You don't know what to do next?

MR. HAWLEY: I'll have to come back to you on that. It's some time since we've had to look into that because as you mentioned, the event is almost a year ago. We'll come back to you on that.

I have one more question on-line. "At the last press conference we were told there would be no sanctions for Argentina. Does this mean the IMF is not going to say anything on the Argentinian data problem? When is the board going to discuss the issue? And will there be a statement after the meeting?"

I expect that the board will discuss this issue in the coming days and I would expect there would be a statement following that. The content of the statement of course will have to await its issuance. Thank you very much.



IMF EXTERNAL RELATIONS DEPARTMENT

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