MR. RICE: Well, good morning, everyone and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department. As usual the briefing this morning will be embargoed until 10:30 a.m.; that is Washington time.
We are going to depart a little bit from our regular process this morning because today we are publishing the Work Program of the IMF for the next six months. It's an important document for us. It lays out the roadmap of policies and issues for the next six months. And I'm very pleased that we have with us at the top of the meeting this morning our Director of Strategy, Policy, and Review, that's Mr. Siddharth Tiwari. And Siddharth has kindly agreed to give you a very quick overview of that work program, take a few questions, and then I will come back, and we will carry on with the regular briefing.
So if that's okay with you I'm going to invite Siddharth to come to the podium. Siddharth, thank you very much for joining us today.
MR. TIWARI: Thank you. I'm going to try and take you through the Work Program very fast. As you know, the way this is put together is the Managing Director presents a global policy agenda at the Spring/Fall meetings. There's an IMFC Communiqué after that reflects the endorsement by the Ministers, and then we have the Work Program of the Executive Board. The Work Program of the Institution is much larger than this. There is research, capacity development, other things that goes on.
At the time of the Spring meetings the MD called for a three-pronged mutually self-reinforcing approach, continued monetary foundation, fiscal actions where available and desirable, and structural reforms. And the Work Program that you have with you builds on these three areas. So on monetary policy it's looking at the impact of negative interest rates on bank profitability, bank lending; it's examining potential spillovers of these policies to emerging markets. It will look at external shocks and how to respond to them in an integrated matter in terms of monetary policy, foreign exchange, intervention, regulatory policy. There has been significant movement of exchange rates of major currencies, so the external sector report that will be presented in July will look at assessment of multilaterally consistent exchange rates, global imbalances.
We have a large program on capital flow measures for this year. The Fund will be reviewing the Institutional bill on the liberalization of capital flows that was adopted in 1992, and it will do it in two steps. Mid-year will be a review of experiences and the application of that view and possible areas where adjustments need to be made. And then end of the year will be the formal review of the institutional view. Next year, early in the first quarter, we will try to bring both views on capital flow measures and macro prudential policies together.
We will push ahead with macro financial surveillance. This came out of the TSR a few years back. There's a pilot in 67 countries and that will be brought -- the lessons from the pilot will be brought to the Board later this year. You will read in the Work Program the FSAP assessments continue, and we will have a discussion with the Board as to what we learn out of them.
On fiscal policy, there's been quite a lot of discussion on how you harness fiscal policy for growth, specifically what is fiscal space, how do you measure it, who has it, and if you have it, under what circumstances should you be using it. Apart from that, the Fund will be pushing on growth trending fiscal frameworks, both in terms of revenue and expenditure composition. There is a focus on infrastructure investment and doing this in the context of public expenditure management debt sustainability framework. In this we will cooperate with the World Bank in taking this forward. In fiscal policy the Fiscal Affairs Department will also look at the financial stability effects of different tax policies, especially with respect to leverage. We continue our work on domestic revenue mobilization, which has gone on for many years and looking at fiscal policy in fragile states.
On structural reforms we had a Chapter 3 in the WEO that laid out principles for structural reforms. Work will go on in this area, assessing specific policy measure in countries. There is work on strengthening institutions and governance on capacity development and on international tax issues, which have come to the forefront.
On standards and codes, there will be two pieces of work, one taking at least a snapshot midyear and the review of standards and codes early next year.
To more areas, emerging issues, there are several of them which have become macro-critical, whether it is climate in small states, whether it's natural disasters; looking at inclusion, whether it's gender, income inequality, macroeconomic impact of this, non-economic spillovers, refugees, impact of technology, FinTech, on labor markets, on statistics; there will be a focus on this.
Last thing, on the international monetary system there is quite a rich agenda, including in the context of the work that's happening in the G-20. The agenda looks at debt. There's quite a bit of work on debt, on the review of the debt sustainability framework. Next year we will look at a review of the framework we used for market access countries, which is essentially most of what we apply to our current programs. We will look at state contingent bonds, instruments, GDP linked bonds, something that the UK is pushing. Global financial safety net -- we are going to look at least two layers in it, one strengthening our cooperation with regional financial arrangements, and second, looking at our own toolkit.
Finally, on the role of the SDR, we will look at whether it can be enhanced. And you know the RMB will enter the SDR basket on October 1 this year. The work is on pace for that to happen.
I'm going to stop here and take a few questions.
QUESTIONER: About the publication of the Report, the IMF and the growing crisis that was conducted by the Independent Evaluation Office – I mean, if you have a date of publication, the exact date that's going to be discussed at the Board.
Thank you.
MR. TIWARI: So I don't have -- I don't know if Gerry has a date for publication. I think the Report is under preparation right now, and they plan to go mid-year, so in the next few weeks.
QUESTIONER: On the issue of the IMF's toolkit, can you give us a sense of what types of things are being considered? And would this likely result in some type of proposal in the near future on how the IMF might revise its programs, the structure of its lending programs, that type of thing?
MR. TIWARI: So on IMF's toolkit, I think in the last three or four years there are a few areas where the membership has expressed an interest that we explore a little more. One is our relationship with regional financial arrangements. We have a relationship with Europe to explore more with Latin America and Asia. So that work will be conducted. Second, in the last year we've been asked to see if we can enhance our support to countries affected by the drop in commodity prices, that's an area where we actively study. The third area that we would like to look at is with multiple transitions in the making whether we have adequate facilities that can support the vulnerabilities that countries might face. And here it is essentially looking at shocks that happen day to day.
The conversation is at a very preliminary stage. I would say it's at stage one right now, to talk to the membership as to what they need. And if we are able to come to a meeting of the minds on what the membership needs and the countries that are willing to be supportive of that, but also use those instruments, I think at that point we will approach the Board. But we are too early in the conversation phase right now.
QUESTIONER: Thank you.
MR. RICE: Siddharth, sir, thank you very much indeed.
MR. TIWARI: Thank you.
MR. RICE: You know, as I said the Work Program is a very important document for us and you all have it now, under embargo, and by 10:30 this morning everyone will be able to find it on the IMF website and really, as I said, it lays out the roadmap for policies and issues that IMF will be looking at in the immediate period ahead. So I think that was useful to hear from Siddharth at the top of the meeting.
QUESTIONER: (Question about IEO report on Europe and the IMF)
MR. RICE: I do not. As Siddharth said, I do not have a date for you, but the study is underway. I should mention that it's not just a study of Greece, it's a study of the Euro Zone programs, and we expect that it would appear sometime in the summer. But you know, that's as much as I have in terms of a specific date for you.
Maybe I'll just start with -- go back to the norm for our press briefing and give you a few announcements. There are some important ones here, and then I'll take your questions, including I see a few things coming in on line.
So again embargo 10:30. Let's start with the Managing Director, Christine Lagarde. Earlier today she delivered a speech in Oslo, you may have seen that. So that's published. Christine Lagarde is now on her way to Luxembourg, or she may even be there by now, to participate in the regular Eurogroup meeting and present the preliminary conclusions of the IMF's 2016 Article IV Consultation for the Euro Area. There will be a press conference as usual at the end of that meeting, so that's expected to happen imminently, and you can catch that live. So that's today.
Tomorrow Christine Lagarde will be in Vienna, and she will make a speech on the future of Europe at the Hofburg Palace. That's 11:00 o'clock Austrian time. And that speech will also be live webcast, and there's a media event after the speech as well.
QUESTIONER: Gerry, excuse me, is that speech tied into the (inaudible)?
MR. RICE: No. No. This is a long scheduled event. So, no, no connection there.
So that's tomorrow. In a week's time, on June 24, Christine Lagarde will welcome Governor Zhou of the Central Bank of China to the IMF for the 2016 Camdessus Lecture, and that will be here and you are invited, I believe. This is the third in our annual Camdessus Lecture Series, Governor Zhou from China.
Then Christine Lagarde, just to finish with her quite busy agenda. At the end of the month, she will be attending the Aspen Ideas Festival, where she will have a media event discussion with the Director of the Wilson Center here in Washington, Jane Harman. And we can get you the specific dates and times on that if you are interested.
Let me turn to David Lipton, First Deputy Managing Director. David, having been in China for the concluding statement of our Article IV Consultation with China earlier this week, will be in Japan, June 18 to 20 for the 2016 Article IV Consultation of Japan.
Let me also mention that our Deputy Managing Director, Min Zhu, will be in China for the famous Summer Davos in June also, June 26. So quite a busy travel and even schedule there.
And let me also point out that, you know, those of you who watch us closely know this, but for those who don’t, let me just mention, we are in the peak period of our annual surveillance activity, and you see now coming from the Fund a stream of reports and statements about the most systemic countries and regions being published.
So, you'll see, as I mentioned, we had the concluding Article IV Statement for China last Tuesday. We will be publishing the Article IV Staff Report for the United Kingdom, along with the Financial Sector Assessment Program, later today, and that has in fact been released to you already under embargo, and will be published today.
So that’s China, the U.K., later today, as I said earlier, there will be the concluding statement from the Euro Area Article IV, that that’s meeting in Luxembourg, that Madam Lagarde is attending. Okay?
And then I also mentioned that on Monday, June 20, David Lipton will be doing Japan, and the concluding statement, again, of the Article IV. And then next Wednesday, June 22nd, will be here in Washington for the Article IV, again, concluding statement on the United States.
There are others. I won't go into detail but, again, just to say, I mean, this is the IMF's core business, this is us -- and this is our peak period, especially for what we call, again, the systemic countries. Happy to follow up with you, and the team happy to follow up with you with any questions people may have about publications, dates, releases, all of that.
So, with that, let me -- thank you for your patience by the way. Let me turn to your questions. Let me begin with you.
QUESTIONER: (Inaudible), but then by the end of the year, and given the repayments that Greece has made to the IMF's -- the kind of work for the other level. And my question is, if that will affect that criteria in order to participate.
MR. RICE: Yes. And any other questions on Greece, or just? All right. So, on that one, whether exceptional access not exceptional access which would be something that would be determined closer to the timing of the decision on financial participation in the program, we would continue to apply the same rules to Greece as we do to other countries that request funded programs.
In particular, and on your question, that means ensuring that debt sustainability is an essential requirement, and that is, again, whether access falls below exceptional access or not. Our DSA would still need to ensure that the debt relief measures being proposed are consistent with debt sustainability.
QUESTIONER: Now that the first of the (inaudible) has been completed, and the first payment will be given in a few days, we hope, how are you planning to deal with the Greek issue from now on? What's next in the negotiations, and are you going to participate?
MR. RICE: Okay. Maybe then, just to give people the status. We are not -- the IMF is not participating in the financing of the program at this point, but we remain fully engaged in the policy discussions with the Greek authorities and the European partners.
In terms of next steps, and I think, you know, this came out of the discussions several weeks ago now, we will continue to discuss the quantification of debt relief measures with Greece's European partners, and on this basis, again, we will update our DSA later this year and, again, I reiterate, an assessment that debt can be made sustainable is essential for staff to make a recommendation to the Board on a potential program before the end of the year. That’s what I have.
QUESTIONER: If I can follow up on that. So, the discussions have begun on the European's debt measures?
MR. RICE: Well, as you know it was discussed even several weeks ago, in terms of parameters and principles, and now the more detailed discussions will be following in this period that we are in, and in the period ahead. And, again, I don’t think that’s news, that’s what we had several weeks ago, that there needs to be the quantification of the debt relief in order for the IMF to make a decision on its participation in the program in terms of financing. So that’s the discussion that’s going to take place.
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