core sector communique

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

Washington, DC 
Thursday, November 3, 2011

MR. HAWLEY: Good morning. I am David Hawley, Deputy Director of the External Relations Department, welcome to another of our regular briefings for the press. As usual, this is under embargo until 10:30 Washington time and that is 1430 GMT.

Before taking your questions, I would like as usual to make announcements. Today and tomorrow, November 3 and 4, the Managing Director Christine Lagarde will attend the G-20 Leaders Meeting in Cannes along with the Special Adviser to the Managing Director John Lipsky. She then travels to Russia, China, and Japan. In November 7 and 8 she will be in Moscow for a meeting with the authorities and she will give a public lecture at the State University of the Ministry of Finance, and October 8 she will give a press conference before leaving for China. On November 9 and 10, she will be in Beijing where she will deliver a speech to the International Finance Forum and meet with the authorities. She will also have a press conference there. On November 12, she will be in Tokyo for meetings with the authorities. The Deputy Managing Director Mr. Shinohara will be visiting the Philippines and is scheduled to give a speech at the Asian Institute of Management in Manila on November 4. Finally, I'd like to announce that we're going to improve the Online Media Briefing Center through which a number of you are joining us today. It will be revamped shortly, that's to say in a few weeks, as the IMF Press Center. Existing accounts will be migrated to the new system, one of the most important features of which is that it will permit simultaneous interpretation of the press briefings to help reporters who prefer other languages. With that, I'm open for questions.

QUESTIONER Can you comment on the report that the Prime Minister of Greece is going to resign today? Can you tell us if he met with Madame Lagarde last night?

MR. HAWLEY: I have no comment on political developments.

There have been many meetings in Cannes. I don't have a readout on that beyond the Managing Director's statement, which she made in Cannes last night, which set forth our position on Greece.

QUESTIONER: If the government does fall in Greece, what happens to the IMF and European program? Do you anticipate that that will continue or does it have to be renegotiated with the new government?

MR. HAWLEY: I don't want to add to what the Managing Director said specifically on Greece. Our programs are with countries. If the authorities in any country continue to implement the program agreed with the Fund, then the Fund is in a position to continue the program. But as for comments specifically on Greece, I draw your attention to what the Managing Director said last night.

QUESTIONER: What is the process from now on? She said that as the referendum is completed and all uncertainty removed, she will make a recommendation regarding the sixth tranche. Can you tell us what she meant with the word uncertainty?

MR. HAWLEY: I've got nothing to add to what the Managing Director said. She outlined the circumstances in which she would consider recommending the completion of the review to our board.

QUESTIONER: I'm asking again, what is the process from now on?

MR. HAWLEY: The Managing Director said that once uncertainty is removed she will be in a position to make a recommendation to our Executive Board to consider the next review of the program.

I'd like if I may to take a question online from a business reporter in Pakistan which says there's a story in the Financial Times that says that Pakistan will forfeit its last tranche of the IMF loan and do we have comments. This is an opportunity to bring you up to date on Pakistan. We're fully engaged with the authorities through policy advice and technical assistance and there is an Article IV mission scheduled to visit the country in November. The Article IV is to conduct the annual review of the outlook for the economy, and specifically on the program which is what this question referred to. The program ended on September 30, 2011.

There's a question here from Ta Nea Newspaper which is, Do you believe that Greece will remain part of the Euro Zone? Are you still confident that the Greece people will resolve the debt crisis and remain in the Euro Zone? I have obviously no comment on that matter.

QUESTIONER: Do you have any comment on the ECB's decision today to cut rates?

MR. HAWLEY: Yes, we fully support the interest rate reduction announced this morning which reflects the decrease in inflationary pressures and the intensified negative outlook for the Euro Zone.

QUESTIONER: Do you think that it could have been made earlier or stronger right now?

MR. HAWLEY: I've got nothing to add other than to welcome this move. David?

QUESTIONER: I wanted to follow-up on the Pakistan mission. Do you have specific dates for that mission?

MR. HAWLEY: I don't have dates, but we can supply I'm sure shortly if you follow-up with Media Relations.

QUESTIONER: But they will arrive sometime in November?

MR. HAWLEY: Yes, soon. It is in this month.

QUESTIONER: In the work program that you put out yesterday there is a discussion plan on the review of credit lines and flexible credit lines. Does that mean that staff has worked on revamping that and management will recommend amendments to its facilities?

MR. HAWLEY: You have seen in the work program that ensuring that our lending toolkit is capable of helping our members is of great importance. We are as the work program outlines looking at ways we can refine our lending instruments. This has work that has been underway for some time. Indeed, over the past year, the Fund has been engaged in the process of review of its existing lending instruments.

QUESTIONER: Will you have any recommendation to the board?

MR. HAWLEY: The board is scheduled to discuss this matter in November.

QUESTIONER: Going back to Greece, can you tell us how Mrs. Lagarde learned about the referendum? Did she receive a letter from Mr. Papandreou? No, I'm not aware of how Mrs. Lagarde learned about the referendum. I have nothing from you on the circumstances in which we learned for the referendum. It was announced by the Greek authorities and we like everyone else took note of that development.

QUESTIONER: Can you tell us about the IMF's reaction about the referendum?

MR. HAWLEY: You saw it in the Managing Director's statement yesterday. She noted the need to resolve uncertainty.

QUETIONER:Is there any news or there any updates about the IMF's mission in Libya?

MR. HAWLEY: There will be meetings with the authorities shortly, I don't have a specific date, but it will be soon. The areas that we will be discussing with the authorities are preparation of a macroeconomic framework, an assessment of public financial management capacity, an estimation of financing needs and assistance that we might provide in restoring the central bank and the payment systems operation.

QUESTIONER: I have a question about China and their negotiations with Europeans over providing some sort of support to their program. We have heard from Chinese officials that they would prefer to use the IMF as a go-between and deposit any funds with the IMF. Is the IMF open to that? Have you discussed that with China?

MR. HAWLEY: I've got nothing on specific bilateral arrangements.

QUESTIONER: Will the Managing Director be discussing these types of things with China when she's in Beijing?

MR. HAWLEY: Let us see what comes out of both the G-20 summit and the travel she is undertaking to China.

QUESTIONER: I wanted to make clear as to the Managing Director's statement last night and all uncertainty removed. Does that just refer to the referendum and the political machinations right now or is it broader uncertainty?

QUESTIONER: I don't want to parse it. I think the statement speaks for itself. She says that she would like to see uncertainty removed before she's in a position to make a recommendation to the Executive Board.

QUESTIONER: Isn't that the problem though that uncertainty in Greece hasn't been removed for over a year now? That's why I'm trying to understand if that uncertainty just refers to the referendum. It gets confusing because if it was for all uncertainty in Greece to be removed, then she would probably never be able to make a recommendation.

MR. HAWLEY: I think the statement speaks for itself.

QUESTIONER: Do you think the referendum is going to remove the uncertainty?

MR. HAWLEY: I've got no comment on political developments.

QUESTIONER: Come on, David. You don't anything today for us.

QUESTIONER (Online): Is the IMF considering studying the possibility to open a new credit line for Italy?

Mr. Hawley: As I've said, the Fund has been refining its lending instruments for some time which is not made in reference to any specific country. And to underline what we've said many times before, there has been no request for financing from Italy.

QUESTIONER: Going with the work program there is a discussion planned about resources in the near future. What did the Managing Director mean by in the near future? Is it by the end of the year?

QUESTIONER: There is a timetable which is laid out in the work program for ensuring that the Fund has adequate resources. This is linked as you know to both the ongoing and future quota reviews.

QUESTIONER: Could you tell me something about the IMF's view about the Japanese government's recent intervention? The Japanese also took action just before the G-20's latest meeting.

MR. HAWLEY: Our most recent assessment of the yen which was done at the time of the last WEO found that the yen is broadly in line with medium-term fundamentals. However, since that assessment the yen has appreciated considerably. If this appreciation were sustained, our assessment of the yen might need to be revised.

QUESTIONER: I will ask you once more, please, do you know in this building that without the sixth tranche that Greece is going to default?

MR. HAWLEY: I have nothing further to add on Greece. I got a question on Portugal from the "Jornal de Negocios " which is, "In Portugal will program financing be enough to support state-owned enterprises given that they will continue to be cut off from the market? What are the risks of a recession spiral from letting fiscal devaluation fall and instead cutting two salaries for civil servants and pensioners?" As you may know because it was announced yesterday, there is a review mission scheduled to visit Lisbon that will start its work on November 7. The program has made a good start. This mission like any mission is an opportunity to discuss with the authorities their program and hear their proposals for how to carry it forward.

QUESTIONER: Do you have any comment on the new figures about unemployment in Spain?

MR. HAWLEY: No, I don't I'm afraid.

SPEAKER: Can you update us on Egypt? Is there a program underway?

MR. HAWLEY: There is a mission which is concluding its work in Cairo at the moment and I expect it will release a statement at its conclusion. So if you'll bear with me, we'll have to await that. But the team is currently wrapping up its visit which was made at the request of the authorities and which has taken stock of the economic situation in light of both domestic developments and the weakening of the global recovery. One last online question who asks can I comment on the current state of discussions with Ukraine. We are in Ukraine at the moment. Discussions are ongoing. I would prefer to wait until the conclusion of those discussions before making a further statement. Thank you very much.