Transcript

2014 Spring Meetings
April 10, 2014

Ashraf El Araby, Chairman: Egypt and Minister of Planning and International Cooperation
Alain Bifani, First Vice Chairman: Lebanon and Director General, Ministry of Finance
Luis Fernando Mejía, Second Vice Chairman: Columbia and Politica Macroeconómica, Ministerio de Hacienda y Crédito Público
Amar Bhattacharya, G-24 Secretariat and Director
Silvia Zucchini, Senior Communications Officer, IMF

Ms. Zucchini - Good evening and welcome to the Spring Meetings of the IMF and the World Bank. Welcome to the G-24 press conference. I'm Silvia Zucchini from the Communications Department of the IMF.

The G-24 ministers just met. On the podium with me for the press conference we have Minister Ashraf El Araby, representing the G-24 chair, Minister of Planning and International Cooperation of Egypt; representing the First Vice-Chair, Mr. Alain Bifani, Director General of the Ministry of Finance of Lebanon; representing the Second Vice-Chair, Luis Fernando Mejía, Macroeconomic Policy Director, Ministry of Finance and Public Credit of Colombia. And, in addition, we have Amar Bhattacharya, the Director of the G-24 Secretariat.

So, let's start giving the floor to the G-24 Chairman, and then we will take questions.

Mr. El Araby - Let me welcome you all once again to this press conference. You will have received our communiqué, so I will be very brief.

The central focus of our meeting was the global economy and the implications for emerging market and developing countries. We also discussed the role and reform of both the IMF and World Bank Group. First, our ministers agreed that despite recent improvements, the global economy is not yet firmly on the path of strong, sustainable growth. The slowdown in growth in emerging markets and developing countries (EMDCs) is not unexpected, given their exceptional performance in the years leading up to and following the crisis. At the same time, it also reflects the adverse impact of cumulative uncertainties and difficulties in the external environment, together with the recent turbulence in financial markets.

There has been a lot of focus on fundamentals in EMDCs, but our members emphasized that they are generally strong and that developing countries continue to drive the bulk of global growth. Our immediate concerns revolve around the potential for disruptive capital flows and exchange rate volatility arising from the normalization of monetary policy in major advanced economies. In order to avoid harmful spillovers and spillbacks, we urge advanced economies to take steps to coordinate and more clearly communicate their policies, and satisfies also have a crucial role to play in facilitating multilateral dialogue and policy coherence. We also called on the international financial institutions and wider international community to provide increased support for the Arab countries in transition.

Looking ahead, we recognize that the growth outlook for developing countries will be less favorable as a result of a variety of factors, including tighter financing conditions, lower growth potential, and full growth in some advanced and emerging market economies and slower trade growth. We thus affirm our commitments to continue supporting domestic as well as global growth. To this end, we agreed that job creation and increased productivity is critical for the long-term sustained growth and development of our members. We also agree to pursue measures to reduce poverty and inequality and increase social inclusion.

With regard to the IMF, our discussion today revolved around the absolute imperative of coming to a closure on IMF quota and governance reforms. We are deeply disappointed that the already agreed 2010 package of reforms had not been implemented. This impacts the credibility, legitimacy, and effectiveness of the IMF, and prevents us from undertaking further necessary reforms and meeting forward-looking commitments. We believe all options to sustain voice and governance reforms need to be considered, keeping in mind that the goal of any reforms must be to recognize the growing role of emerging markets and developing countries in the global economy, while enhancing the voice of the poor and small, low, and middle income countries.

The third issue we discussed was the role and reform of the World Bank Group. Ministers expressed support for the change initiative under way at the Bank, but stressed the importance of ensuring that it does not become disruptive. We believe the overarching focus of reforms must be on supporting clients and ensuring that enough capital is available to meet their financial, technical and advisory needs in a more cost effective, timely and less bureaucratic manner.

We see the repositioning of the organization as one World Bank Group as a positive development and call for this to be implemented in a timely fashion. We also support the design of a new country engagement model and stress that this must enhance and not undermine country ownership. We believe that the global infrastructure facility represents a constructive step toward meeting the enormous infrastructure investment and projected development requirements in developing countries.

With that, I will open the floor to questions.

QUESTIONER: I have two questions. One is on the IMF. In your communiqué you say all options to sustain voice, etcetera, should be considered. Are you thinking of something in particular to go beyond the 2010 Quota and Governance reforms, given that is seems hard that it will come into effect swiftly? And my second question is concerning the Global Infrastructure Facility the World Bank is considering. Can you elaborate on any progress being made? Are countries interested in contributing to this fund?

Mr. Bhattacharya: Let me begin with the global infrastructure facility. What we have on the table is a proposal from the World Bank, and there was an initial discussion yesterday basically outlining it. As none of the elements of design or detail have been agreed upon, it would be premature for us to comment on it. Let's say we have a wish list. We have huge needs and would like to see those needs met. We support very much the fact that it is focused on trying to catalyze private sector investment. We think that is very important. But, we also want to make sure it is as inclusive as needed, and that it must meet the needs of all our countries. That is on the global infrastructure facility.

With regard to the IMF, as the minister just said, we believe it is absolutely imperative to follow through on the 2010 Quota and Governance reforms. Those reforms had some forward-looking commitments, namely undertaking a comprehensive review of the quota formula by January, 2013, and to complete the 15th quota review by January, 2014. Those, of course, have not been met. But, we need to make sure that we can not only deliver on the 2010 reforms, but we keep the momentum for future reform, because the 2010 was only a step, but only a step toward what is needed.

QUESTIONER: Just to follow-up, so it is important to deliver. The U.S. congress is not open to it. So are you ready to be stuck in this situation for another at least six months to a year? Do you see any possibility that the U.S. would ratify this?

Mr. Bhattacharya: That is why the language in the communiqué, which our ministers discussed, states that all options need to be considered. We know that the U.S. authorities are committed to the ratification of the reform. But, nobody knows exactly when this will happen. And in that context, we need to think about the adequacy of the Fund's resources, we need to think about the Fund’s governance—that is the shifts of representation in favor of EMDCs—, and we need to think about delivering on the fundamental changes that were agreed upon.

So, of course, this is not a discussion the G-24 can have just by itself. It includes all members of the Fund. Indeed, this will be discussed in the G-20 and in the IMFC. And, we are basically putting pressure that we get the results we are looking for.

QUESTION: I know the IMF, World Bank, G-20 and G-24 meetings are just getting started, but I'm wondering if you could describe anything about the mood in Washington, are there concerns about Russia and Ukraine, are they souring any parts of the talks particularly? Thank you.

Ms. Zucchini: I don't think this is actually an issue that we can address in this press conference. The G-24 covers different issues.

QUESTIONER: In 2010 there were initial contributions made in the form of bilateral loans to the IMF that were contingent on the quota reform. Has there been any talk of withdrawing those or reconsidering, or is that a done deal that stays on the table?

Mr. Bhattacharya: You’re right that the bilateral loans are temporary and they have to be renewed. And they were indeed provided on the assumption that the 2010 reforms would go through. And, that there would be the augmentation of quotas as a result. If that doesn’t happen in time, then the membership has to consider how to deal with that issue. That issue is very much alive and under discussion.

Ms. Zucchini: If there are no more questions, we will draw this press conference to a close. Thank you very much for attending the G-24 press conference today, and have a nice stay in Washington D.C.