September 15, 2016

MR. RICE: Good morning, everyone, and welcome to this briefing on behalf of the IMF. I'm Gerry Rice of the Communications Department. And as usual this morning, the briefing will be embargoed until 10:30 a.m., that’s Washington, D.C. Time.

Let me begin with a few announcements, and I'll ask for your patience because there are quite a few. And the reason for that is, as many of you know, we are heading into our peak period of the year, which is the Annual Meetings. It's coming up October 7^th to the 9^th, here in Washington.

And in the run-up to those meetings we have quite a bit happening. I think much of it will be of interest to you, so let me go through it quickly, and then I'll come to your questions in the room, and see if we have a few questions coming online already too.

So, you probably saw the Managing Director had been in China for the G-20, and she had been in Laos for the ASEAN Summit. And the last couple of days she was in Canada for an official visit there.

So, upcoming on Sunday, that’s September 18, the Managing Director, Christine Lagarde, will be giving a speech at the International Bar Association in Washington. And we'll share that with you. I'd like to believe it's a major event, being held at the Washington Convention Center on Sunday, and we will get that to you. That's the International Bar Association.

Then the following day, that’s Monday the 19^th, the Managing Director will in New York City, where she will participate in a roundtable discussion on the implementation of the 2030 Agenda which, as you know, is related to the sustainable development goals approved by the United Nations last year. She will be participating in that event with other international organizations, and the Chinese authorities.

So this is all part of the UN General Assembly events that are being held in New York next week. So that’s the 19^th; and then on the 22 ^nd, she will be participating, amongst other things, in a USAID event, on the topic of Financing for Development.

And then she will speak at the UN high-level panel on women's economic empowerment. So that’s all happening in the context, again, of the UN General Assembly events next week in New York.

The following week on September the 26^th, the Managing Director will be in Cartagena, Colombia, to attend the Signing Ceremony of the Peace Agreement there. And a couple of days later, she will be in Chicago to deliver what we call our curtain-raiser speech. That’s raising the curtain on the Annual Meetings, and giving a sense of what we expect the discussions to be at the Annual Meetings, what we expect the topics to be.

That’s going to be, again, a major speech at an event at the Northwestern Kellogg School of Management in Chicago. And as usual, will be available to you, webcast-live, et cetera, et cetera.

Our Deputy Managing Director, Mitsuhiro Furusawa, is visiting Guinea today, Guinea. And tomorrow he will be meeting with high-level officials and others. And then Mr. Furusawa will travel to Senegal, where he will meet with government officials, and participate in a conference on financial inclusion, organized by the Community of West African States and the IMF.

A few more things, again, running into the Annual Meetings; we will release tomorrow an IMF staff paper, one of our SDNs, Staff Discussion Notes, on the economic impact of conflict and the refugee crisis in the Middle East and North Africa, along with a statement, a blog actually, by Christine Lagarde.

Again, the UNGA, next week, refugees is one of the big issues being discussed. So we will be releasing that report tomorrow.

Then on September 27^th, which is a Tuesday, I believe, we will be releasing, again, what we refer to as the analytical chapters of the World Economic Outlook. So not the WEO itself, but the analytical chapters, and I know again, this is of interest to many of you. The chapters will focus on trade, disinflation, and spillovers, and we'll get you more details of those things in advance, and the precise timing and all of that, but that’s September 27^th, for your calendar.

Then on the 28^th, as I mentioned the Managing Director will be in Chicago giving the Curtain Raiser Speech. Then on the 29^th, so that’s the Thursday, the analytical chapters of the Global Financial Stability Report, the GFSR, will be presented to you, to the press, at our headquarters here. And again, these chapters will focus on issues of corporate governance, financial stability in emerging markets in particular, and on monetary policy and the rise of non-bank finance. Again, all very topical.

Finally, you'll be glad to hear that word, as came up at the last press briefing actually. On October 1^st, China's currency, the renminbi, will be added to the Special Drawing Right basket, and we will have some communication around that for you, and we'll be in touch with the specifics of that. So that’s October 1^st, which is actually a Saturday, so we'll probably be doing something with you on the Friday preceding, but we'll coming back with more detail.

Sorry about the length of those announcements, but quite a lot going on, and I hope that’s helpful to you.

QUESTIONER: Thank you. To go on with the schedule; when will you be releasing the documents for the Ukrainian review that happened last night? And is it true that you are planning for two additional tranches in the next six months? Thank you.

MR. RICE: So we, for those of you who aren’t following it, the Board did approve the second review of the Ukraine Program yesterday, and there was a press release related to that promise, and the announcement of a disbursement of $1 billion under the second review.

We would expect the report to be published soon. I don’t have the exact date for you. It will be published along with the report on the ex post evaluation of 2014 standby arrangement, which was also discussed by the Board yesterday. And, again, we did issue a press release last night.

On the next review and the next disbursement, again, that could be by the end of the year. I don't have a timing on that, and I don’t have numbers on that in terms of what the disbursements agreed might be, it's something the Board would discuss at that time. Okay on Ukraine?

QUESTIONER: Fine.

MR. RICE: Okay. Good. Good morning.

QUESTIONER: Good morning. Can you, please, give us an update of the negotiations that are taking place right now, in Athens? And did you have the dates of the Article IV Consultation, it will be helpful?

MR. RICE: Yes. So, we talked about this last time, let me just clarify it again. As there's a mission on the ground, a Fund mission on the ground right now, working with our partners in the Troika, working with the European institutions, that’s this week.

Then next week, the Article IV process, discussions, engagement with the Greek authorities will begin next week. So those are two separate commissions. One, discussions around the ESM Program, the European Program, and then next week or Article IV which is a separate process, an IMF process; the Article IV is something, as you know, is something that we do with all member countries.

We haven't done with Greece for about three years, so that process will begin, and as I mentioned last time, the Article IV, I think one of the benefits of it, is it's really -- it's a chance to step back from the program details, and look at some of the medium to longer-term issues entailed and look at some of the medium to longer-term issues facing the Greek economy. As usual, with those consultations, we expect a communication at the end of that process, normally it's a couple of weeks. And, you know, we can get you more information on that.

QUESTIONER: Okay. So yesterday the Greek Minister of Labor said that the Greek government cannot accept what you guys suggest regarding the labor market reform.

MR. RICE: You guys?

QUESTIONER: The IMF. So he also described the distance between the two sides huge, and he described the IMF as an extreme player. How do you comment on that?

MR. RICE: I haven't seen those comments actually, so I don't have any comment on them. You know, as I mentioned, we have a mission on the ground right now and there about to start this first very important Article IV Consultation in three years in Greece. We'll be working closely with the Greek authorities and collaboratively with the Greek authorities on that. And, of course, we're working side by side as I mentioned with our partners in Athens.

QUESTIONER: (What do you have to say about the upcoming review?

MR. RICE: Well, the upcoming review, as you know, is relating to the ESM program, to the European program. So I don't have any comment on that. I think you know where we stand, that we're not participating with financing at this point. That said, we remain fully engaged in those policy discussions with the Greek authorities and the European partners.

QUESTIONER: Can you tell us, Gerry, what is your position on the labor market? I mean, do you agree with the government?

MR. RICE: You know, it's something that's going to be under discussion, in the context of the ESM review, and I'm sure that it will also be something that will be looked at broadly in the context of the Article IV. So, you know, let's wait for that, that's all going to be upcoming very soon.

Good morning.

QUESTIONER: Good morning, Gerry. I want to just go back to the Ukraine for a bit.

MR. RICE: Sure.

QUESTIONER: Just wondering, can you explain to us sort of why this tranche was reduced from its original size? Originally, it was anticipated to be $1.7 billion, and it turned out to be about $1 billion. Was that because of the slow pace of the reforms, the waivers that were identified in the press release? I wonder if you could explain that.

And then also what does Ukraine need to do in order to get the next tranche of funds, whenever that might be, perhaps later this year?

MR. RICE: A few questions there. On the waivers, again those of you who follow the Fund, it's a technical issue, and there are often technical issues in these programs which require a technical waiver. So it's not, you know, it's not something of enormous significance, not too much should be read into that particular factor. It's something that -- a waiver of some technical aspects is really quite normal for us.

I think, you know, the key question you are asking is about the amount, the billion relative to what had been initially planned of $1.7 billion. And again, a re-phasing of a disbursement of the particular amount of a disbursement is not unusual in our programs. We have these reviews precisely to calibrate the policy recommendations and, you know, to make sure that the financing is aligned with the balance of payments needs and with the policy implementation. And that's what has happened in this case. And again it's not unusual, and this has been done many times in the past actually for other country cases as well. So it's really a re-phasing is how I would characterize it of the actual dollar amounts.

In terms of what Ukraine would need to do for the next review and the next disbursement, well, we just announced yesterday this one, you know, the approval of this review and this disbursement, so we should probably wait and see. But, you know, there was a statement from Christine Lagarde last night on this, and she indicated -- I won't read it to you all, but if you look at her statement, she does, I think, talk about some of the challenges that lie ahead. And, you know, I think that gives you a sense of some of the issues certainly that are going to be part of the discussion going forward.

QUESTIONER: Just one quick follow up. The Central Bank Chief in Ukraine this morning had identified the next tranche is about $1.3 billion. Do you corroborate that figure?

MR. RICE: No. I'm not going to put a number on that because that's something that, as we just saw from yesterday, that's something the Board will decide in the context of the next review. So I think we have to wait for that.

QUESTIONER: Thanks.

QUESTIONER: If I may jump in for a second again. It just occurred to me, Russians, even before the meeting, before the Board meeting, had announced that they would be voting against. Can you say anything about that? Did they vote against, and did anybody vote with them, or how did it go?

MR. RICE: You know, we never get into how particular countries have voted at the Board. Never.

Good morning.

QUESTIONER: Good morning. .

MR. RICE: Nice to see you back.

QUESTIONER: The Fund is always concerned about uncertainty as a risk for economic growth. Spain is heading for more than a year without a proper government. How can you explain that in this moment or in this period is growing at that solid pace? Is uncertainty good for Spain in this case?

MR. RICE: Well, you know, I don't want to comment on the politics of Spain, but as you say we're always concerned about uncertainty, so I won't comment on the politics. But what I can tell you is that we think Spain's strong economic recovery continues and this has been helped by past reforms as well as some helpful external tailwinds. I can tell you we think real GDP growth in the second quarter of this year was stronger than expected and this will be reflected in the revised projections to be released with the World Economic Outlook, which will be released at the time of the Annual Meetings in October. So stronger growth, and we think that will be reflected in the revised projections.

Over the medium-term we project GDP growth to moderate to its potential rate of around 1.5 percent and potential growth remains constrained by weak productivity growth, debt overhang in some sectors and high structural unemployment. So we're not seeing at the moment evidence of any negative impact on growth at this stage.

Other questions in the room? Let me just change it up a bit. Good morning. I'm sorry?

QUESTIONER: Good morning. Could you please talk about the situation with Mozambique? I understand the president is in town today to talk about the debt and the scandal, the crisis?

MR. RICE: That's the right, the president is in town today. And I can tell you that he will be meeting with Christine Lagarde, the Managing Director later today; part of our ongoing dialogue with Mozambique. We've talked a lot about Mozambique here in recent press briefings. I can tell you that an IMF staff team will be visiting Maputo on September 22 to review recent economic developments and continue to advise the authorities on macroeconomic policies. The mission will be looking in particular at the 2016 revised budget and the monetary policy measures recently adopted by the Bank of Mozambique. It will not hold discussion for a review under the SCF arrangement that we currently have. You'll remember that we had a staff visit in June. That was a fact finding linked to the previously undisclosed borrowing issue that the Fund has been discussing with the authorities.

Maybe I should say that in that context;there have been reports highlighting that the Mozambican authorities are open to an international audit of its public debt, so again related to that undisclosed borrowing issue. And we of course welcome that development and see that as a positive step concerning the transparency measures that have been proposed to the authorities. So, you know, that issue is going to be discussed. And again, President Filipe Nyusi, he will be meeting with Christine Lagarde this afternoon.

QUESTIONER: And if the audit does take place then lending could or will resume or?

MR. RICE: Well, I think we just need to wait and see how that process unfolds. And clearly there is a lot of engagement, a lot of discussion at the highest level today, and then as I mentioned a staff mission coming up a bit later. So let's wait and see on that one.

QUESTIONER: Good morning, I’m with Bloomberg. Regarding the Egyptian loan program, when will the Board need to decide whether to approve the loan and what further steps to the Egyptians have to take before approval?

MR. RICE: What I can tell you is we expect the Board to meet in a few weeks' time. So this is again, for those who don't follow it -- this is the IMF staff level agreement on a three-year facility with Egypt for an amount of about U.S. $12 billion. And I think the discussions are progressing well, the program discussions are on track and, you know, as I said we expect the Board to meet in a few weeks' time. So good progress is being made.

In terms of, you know, as you put it, what the Egyptians need to do, I think that's laid out pretty clearly in the staff level agreement that we issued. A number of topics there. There has been good progress made, as I mentioned, including on the VAT issue. You know, the law that was passed, we think that's a historic achievement actually and something to congratulate the government on.

The other issue was financing. I can give you a bit more detail on that if you would like, but again we think good progress is being made there as well. The IMF is proposing to commit $12 billion, as I mentioned, over a 3-year period, but as part of the overall financing for the program we had been looking for an additional $5 to 6 billion in financing from others. So when I say, you know, we see progress being made there too.

QUESTIONER: Do other countries need to step up with financing?

MR. RICE: Yes. As I said I think progress is being made there. If you want a bit of detail, Christine Lagarde met on the sidelines of the G-20 in China with President Sisi, and they discussed the reform program, and they discussed the financing issue. We obviously confirmed our support, doing everything in our power that we can to help Egypt secure that financing; again so we can bring forward the loan request to the Board. And what I can tell you is my understanding is there were, at the G-20 Leaders summit, very productive discussions with China and Saudi Arabia. And, again, we are helping to secure the necessary financing and progress is being made. We expect the Board to meet in the next few weeks.

QUESTIONER: Okay. Thank you.

MR. RICE: Sir?

QUESTIONER: Could I just follow up on that? The discussions with China and Saudi Arabia were about them contributing to the additional financing that is needed? And also how much of that $5 to 6 billion has been secured already?

MR. RICE: That's my understanding, that yes, there were specific discussions with China and Saudi Arabia about contributing to the financing. I do not have numbers for you. You know the overall ballpark, right, the overall envelope that the IMF has been saying is required, but I don't have what the specific country contributions would be. That will be transparently communicated at the time of the Board meeting and in the subsequent publication of the documents.

I'm going to -- let me take one from you. On Greece?

QUESTIONER: Yes.

MR. RICE: I just guessed that.

QUESTIONER: Actually, I have two questions. The first one is last time that we checked with you, you said that you didn't know of any meeting of the Washington Group during the Annual Meetings. I wanted to ask you, Gerry, if anything changed because the Europeans are now saying that the meeting is going to happen.

MR. RICE: I'm not aware. I don't have any further information for you on that. I mean, I can imagine that I would expect in fact that Greece will be discussed in various fora during the Annual Meetings. That has been the case in all the recent meetings, but I don't have any specifics for you on that.

Let me go online. I'll come back in if there's a couple more. But there's a couple more on Egypt that maybe I'll take. One is MENA News Agency, one is on the VAT law, and another one is just from Matthew Lee, is more broadly on the financing of the Egypt program and a concern that it will increase debt and so on. So let me just take those quickly. We already talked about Egypt quite a bit.

On the VAT, I'll just repeat, we think it's a significant achievement, and we commend the authorities on delivering on that. The VAT is a modern, efficient tax. It will help increase government revenues and reduce the budget deficit and enable the government to collect more taxes from better off people and free up more resources for social spending for the poor and vulnerable groups, which has a big part, a big emphasis in this program. And that's something we are pleased about, the VAT.

On the concern on the program just adding to government debt and so on, the program amongst other things is committed to reducing foreign exchange shortages, bringing down the budget deficit and government debt, and raising growth and creating jobs. And as I mentioned, it also has a strong emphasis on strengthening the social safety net to protect the poor and the vulnerable groups affected during the process of adjustment. So I -- as I indicated earlier, we feel that the budgetary savings that can come from other measures will be partially then sent on social protection and you know, that’s a big thrust of the program. There are two other questions that I want to take because they take us to other parts of the world.

One is on South Sudan and one is on Zimbabwe. Let me take the Zimbabwe one first because we’ve talked about Zimbabwe a lot here in previous briefings, but the question keeps coming back. In fact, it says two weeks ago you said there is no financial program under discussion with Zimbabwe and can’t be until arrears are cleared neither is discussion of clearing the arrears so would that be sufficient?

And again, I want to repeat that there’s no financing program under discussion with Zimbabwe at this point. Indeed, the authorities have announced a plan to clear the arrears. Once they are cleared, which they are not at this point, our Board would need to discuss that.

Meet, discuss that, and approve the normalization of relations with Zimbabwe, and only after that could other things happen. But again, there is no financing program under discussion with Zimbabwe at this point. On South Sudan, the question is the government adopted a budget for 2016/17, which tripled spending.

It says the finance minister said it contains reform measures that were advised by the IMF in their consultation in May, is that in case, and please describe the IMF’s work with South Sudan.

A couple of important things, one, due to the ongoing political struggles and conflict in Sudan, our staff have recently been evacuated out of Juba and our TA, our technical assistant’s capacity development program with South Sudan is on hold at the moment with all missions suspended and for that reason -- of course, we hope that all parties can come to some form of reconciliation very soon, so that’s actually the status. A bit of the background is that we did have an Article IV consultation with South Sudan earlier this year, over the summer until June.

And even that assessment, the assessments that we made then, economic conditions, political conditions have deteriorated, as we all know in recent months, and so we probably would need another mission to update that information and those projections and discuss policy options with the authorities, so we don’t see the Article IV being concluded until probably the end of the year, so that’s kind of the status where we are again. Our staff has recently been evacuated out of Juba because of what’s been going on there. Is there another question in the room?

QUESTIONER: If I may? I am sorry, I keep bouncing back to the same subject. By definition, since the review, the Ukrainian review was completed, it means that the question of the debts, sovereign debts of Ukrainian were considered deemed adequate, the approach.

What can you tell us about the position of the Board in regards to the outstanding arrears that Ukraine has?

MR. Rice: As you say, Ukraine has accrued arrears on the bond held by Russia, and I can tell you the Board assessed whether the good faith requirement of the policy, the IMF policy for landing into arrears to official bilateral creditors, has been met.

The Board considered that the requirements of the policy have been met so -- Okay?

QUESTIONER: I would like to follow up on the labor market reforms, and I would like to ask you what exactly --

QUESTIONER: I am sorry, but looking ahead, the Managing Director mentioned the subject in the statement last night, so what do you expect from the authorities going forward on the debt issue?

Mr. Rice: Yeah, on the debt issue, you know, we are not -- we’re not part of those negotiations. I’ve said that here many times, but we have welcomed the initial contact and discussions between the two sides, and we encourage Ukraine and Russia to continue these discussions to find a cooperative solution that contributes to the financing and the debt objectives of the programs, so we -- I guess we are urging continuation of these discussions.

QUESTIONER: With all due respect --

MR. Rice: I am going to make this one the last one.

QUESTIONER: One last time, yes. With all due respect, urging, as compared to the actual decision of the Board to release the funds does not sound convincing because what is there to convince the Ukrainians to actually conduct the negotiations in good faith if they receive the money anyway? What is there -- is this a programmatic requirement for them to actually do something about the debts and what penalties will they face if they don’t?

You know, I can only just repeat what I said, which is very factual, that the Board considered this issue yesterday as part of the overall decision on the second review and in the context of good faith requirement of the policy for lending into arrears to official bilateral creditors and the Board considered the requirements of the policy have been met. Okay? I am going to take two more, her and one more.

QUESTIONER: What exactly do you want to see Greece implementing on the labor market reforms? You said that we know where the IMF stands on that issue, but the question is are you planning to be more flexible this time?

MR. Rice: As you know, the IMF is always flexible. I just -- we’ve got a mission on the ground. Part of the ESM this week and then a very in depth article 4 assessment next week.

I am sure we’ll be touching on this issue so I am not going to try to, you know, get ahead of that. This will be the last question.

QUESTIONER: Thank you. The U.S. has been showing some signs of growth and some signs of stagnation and different messages from the authorities as to the monetary policy that might be coming up. Can you tell us if the IMF has revised any of its outlooks at this time?

MR. Rice: What I can tell you is that we will be giving our updated forecast on the U.S. in just a couple of weeks’ time in the context of the World Economic Outlook that will be released at the time of the annual meeting that I mentioned earlier.

But I think, you know, we’ve already said this publicly but the recent weak U.S. GDP data, particularly disappointing data on private investment is of concern and is in contrast of the solid U.S. labor market and robust consumer demands. So staff will be revising downward the forecast for the U.S., and the particular numbers around that will be published in October with the wheel. Again, I think we’ve said that publicly before.

QUESTIONER: Thank you.

MR. Rice: So I am going to close the briefing here but before I do, I am going to give you one more piece of news, and this is not under embargo until 10:30. In fact, it may be popping off already.

It’s very good news and that is that Christine Lagarde, the Managing Director, has appointed a new director for our African department, and that’s just being announced right now, so you’re hearing it first, and it’s Madame Lagarde’s intention to appoint Abebe Selassie as Director of the IMF’s African Department and Abe, as he is known to us in the Fund, is succeeding Antoinette Sayeh, who is well known to you, and Antoinette announced her departure previously.

Abe will begin his work on September 19^th so very soon he will be with us. He will be the new director for the Annual Meetings.

Abe has a remarkable career, has had a remarkable career at the Fund. Enormously respected inside the institution and outside too for that matter. Tremendously experienced and tremendously well liked, I can tell you, by the Fund and the staff. So good news for our next African director. With that, I am going to finish this briefing. Thank you for your patience. We are going to be talking to you a lot in the coming weeks, with a lot going on at the IMF and looking forward to working with you.