January 26, 2017

MR. MURRAY: Hi, good day. I'm William Murray, deputy spokesman in the Communications Department here at the International Monetary Fund in Washington. This is one of our regular press briefings.

Again, all briefings are embargoed until 10:30 a.m. Washington time. We'll have a broadcast -- archived webcast when the embargo expires, and at some point today we'll have a transcript published of this briefing.

Before I take questions from journalists here in the room and online – quite a few online today - I'm going to go through some basic, brief announcements. Let me first start with management announcements. As most of you know – we announced it at the last meeting – Managing Director Christine Lagarde is on a 3-nation visit to Africa. She is now in the second country, Uganda. She’ll be there for the next day, and then will be in Mauritius to deliver a keynote address at a conference on cross-border banking and regulatory reforms, implications for Africa from international experience. Media relations has staff on the ground with the managing director at the moment, and we’ll keep you informed as thing come out of the mission there.

Deputy Managing Director Mitsuhiro Furusawa will deliver a keynote speech in Japan at the IMF-JICA Seminar, on regional development, fiscal risk, fiscal space and SDGs. This official visit to Japan is scheduled for February 1^st and 2^nd. That’s it today, as far as management announcements go.

Let me just flag one other thing, again, today we published the staff report, this follows on the 2016 Low-Income and Developing Countries Annual Report that we briefed on at the last press briefing two weeks ago. The report that we published this morning, explores how policy and reforms aimed at boosting growth affect the extent of income inequality in low income and developing countries and how complementary policy measures can be used to offset adverse distributional effects of such reforms.

In addition to that staff report, we also published a related blog by Managing Director Lagarde. It's noteworthy, and you should give the blog a look if you haven’t. –Lastly, before I open the floor, our last briefing is here in Washington on February 9^th.

Why don’t I do this? I think I know where the briefing may go today. I'm going to get to Greece in a second. Is that okay with you? And we'll take Greece questions, and I'll bundle those a little bit. Yes?

QUESTIONER: Hi. I just have a question about a report last night. Mr. Trump apparently preparing an order that would cut funding for international organizations – including the U.N., many others. I'm wondering if this would go through, how it would affect the IMF directly. And also indirectly by, you know, reducing funding from other organizations - would that put pressure on the most vulnerable countries that you serve? And how would you deal with that? Thank you.

MR. MURRAY: Thanks. You know, I think I've seen the same reports that you’ve seen, and we have no information whatsoever on this, and there are a number of things floating around at the moment that are not official. We haven’t seen anything, so I really can’t speculate at this time. When we do see something officially, we'll certainly have a comment, but I really can't -- it would all be speculative whether or not this is factual or not. Until it’s a fact, I’m not going to comment.

QUESTIONER: Can you discuss how solid the current level of IMF funding is. You just had a capital last year.

MR. MURRAY: Well, keep in mind, and I think all of you in the room know this, so this is more for those that are not in the room, or who don’t normally cover the International Monetary Fund. We do not have annual dues. There are other organizations that require member countries to pay annual dues. We don’t have annual dues, so we’re funded. And that’s where we stand. We’re liquid. Our accounts are published on our website. You can check out our liquidity status every week, and we’re fine. We’re in a good place right now in terms of our liquidity. Yes?

QUESTIONER: Given that the U.S. wants to retrieve from multilateral institutions on a broad level, is the IMF concerned that the U.S. might exit the Fund?

MR. MURRAY: You know, again, you are asking me to speculate. I am not going to do that today, depending on what they may or may not do. And I haven’t seen them articulate that clearly.

QUESTIONER: Actually last week you revised the outlook for the U.S. in spite of the uncertainty of the Trump policy, and now you see he’s making good on his threats – and he retreated from the TPP, so do you think that the IMF maybe jumped the gun a little bit, like assuming that he was not going to wage, like, a trade war?

MR. MURRAY: Okay. Thanks. Let me step back a little bit and remind those of you who weren’t at the press conference on January 16 by Maury Obstfeld. This was an issue that was raised then when we published our latest World Economic Outlook Update. Maury was very clear, and I will just briefly repeat what he had said at that time, which is: there are things that were fairly clear, in terms of where the U.S. administration is heading. Tax reform, things of that nature, that enable us to make some judgments in terms of how U.S. growth and global growth is going to be affected. But one of the issues that we underlined just a week ago, is that one of the vulnerabilities -and this is also something that Managing Director Lagarde reinforced in Davos -one of the vulnerabilities is on the trade front, and there's a lot of uncertainty, and until the uncertainty is clarified, it's not clear how that is going to affect our expectations regarding the U.S. and world economy. Right now we obviously stand by our forecast.

QUESTIONER: If I may follow up. In spite of those uncertainties you revised upward the outlook for next year, so I was wondering, can you, just for the record, make it clear that you didn’t do that to please the incoming administration?

MR. MURRAY: No. We do forecasts because we need to come up with baseline scenarios for our operations, and as Maury said, the baseline scenario, the current baseline scenario is the forecast we put out last week. If various dynamics that affect that baseline change, we'll revisit it. Of course, we've got the World Economic Outlook in long form – it’ll be published in April, and we’ll see what happens then. We have to take on baseline scenarios. We do that as our normal course of business, and it's not to -- it's to please our own abilities to do our work.

QUESTIONER: I’m wondering, who is currently leading the U.S. representation office here at the IMF? And do you have an indication when the vacant post of the American executive director will be filled?

MR. MURRAY: Good question. You know, the U.S. has a representative at the Executive Board; that person is still seated. I would recommend that you contact the U.S. Treasury to find out what the plan is. Just to explain process here. The U.S. Treasury is our interlocutor with the U.S. government. That’s been true in the 70-year odd history of our relation with the U.S. – a good relationship with the U.S. and presidents over the last 70 years. You should contact Treasury. Find out what their plan is. But they are represented here at the Fund. They are still, as you know, the Treasury Secretary is still pending confirmation, and there are organizational issues there. But it's really Treasury to decide who the representative is for the U.S. – or the U.S. government. But they do have an office here. They’re operating, as far as I can tell.

A follow-up? We'll get to Greece. I promise we'll get to Greece in a second here. QUESTIONER: Just a quick follow-up --

MR. MURRAY: Yes. Sure.

QUESTIONER: -- to that Treasury thing you just said. Obviously, the new Treasury secretary nominee Steve Mnuchin had his hearing last week and has made some statements in answers to written questions in which he has maybe somewhat backed off, I guess - it could be interpreted, the strong dollar comments that the Treasury Secretary usually says, is that a strong dollar is good for the United States. He is saying that a dependable dollar is good for the United States, and if there are short-term spikes sometimes that might be bad. Is there any concern that the Fund might have that there might be a shift in their view on the dollar?

MR. MURRAY:

I can't give you a concrete answer on that because we're still, you know -- it's still early days in terms of this administration's policy making, but in general we look at exchange rates at a much longer timeframe, and we'll certainly look at exchange rates in the context of the U.S. dollar when we do our annual review of the U.S. economy, which is starting to gear up and we finalize it by midyear.

Also, for the record, as you all know, the external sector report, which we publish every year in mid-year, June-July period, looks at exchange rates across the spectrum. So certainly we take an interest in exchange rates and where they're going. But in terms of specific policies, until they're clearly expressed I really can't comment.

Let me go to the online. I’ve got a number of questions here. I'll start with him. He has got a question on Mozambique. It says, on Mozambique and its recent default, please describe the timing of the IMF's review of a program and its relation to the ongoing audit and its status. Let me give you a few items on that.

The IMF remains fully engaged with the authorities. We continue to follow the ongoing independent audit of Ematum, Proindicus, and MAM, and pursue our discussions on possibility of a new IMF supported program. In terms of our policy on lending into arrears to private debt holders, as in other cases the IMF will follow the policies as approved by the IMF's Executive Board, and by extension membership. The policy stipulates that the Fund can provide financial support to member countries with external arrears to private creditors, provided that prompt Fund support is considered essential for the successful implementation of the member's adjustment program, and the member is pursuing appropriate policies and making a good faith effort to reach a collaborative agreement with its private creditors.

That's what I have for you today on Mozambique. Thanks.

I've got another question here from Ghana. What is the stance of the IMF on the decision by Ghana's new government to renegotiate the three year IMF program?

Thanks for the question. We expect the IMF supported program to continue. Further discussions on the status of the program will be held with the authorities during an upcoming IMF staff visit to Ghana at the beginning of February. Staff is at the beginning of February. This will carry on into follow up visits concerning the program, as well as the Article IV Consultation. So basically stay tuned for our missions to Ghana starting in February.

Okay. So that's good for now. I'm having a -- my screen is flicking around.

QUESTIONER: Greece?

MR. MURRAY: I'll turn to that in a moment. How's that? Okay, there we go. Go ahead, please.

QUESTIONER: So the new DSA has been given to the members of the Executive Board, and if you have a date when it's going to be discussed there. And also if you have anything to share from the Eurogroup, which if I'm not mistaken is still ongoing?

MR. MURRAY: Right. Of course because the Eurogroup is ongoing, I'm not going to have specific comments there, and you guys know that. But let me give you some basics today. The Executive Board is expected to discuss the Article IV and the ex-post evaluation reports on February 6. We expect publication of those reports will follow shortly after that Board date and will be in line with our usual practices.

QUESTIONER: So according to some information, the DSA describes once again the Greek debt as highly unsustainable. So my question is, how are you planning to move forward when the Europeans say that the medium-term debt measures have already been described, and there will be no further changes?

MR. MURRAY: Okay. Well, we've been pretty clear, I mean, I think all along. My message to you on Greece in that regard is not going to change today. As you know we issued a statement -- what -- last week after a meeting between the Managing Director and the German Finance Minister in Davos. There is really no change in our views in terms of the sustainability of a Fund program. So that's where we stand.

QUESTIONER: Are you still planning to participate with the program although the other partners do not agree with what you think is necessary in terms of targets and debt measures? Are you planning to participate? When are you going to answer this question?

MR. MURRAY: Well, you know, we've been fully engaged all along. We remain fully engaged with the Greeks and with the Commission in terms of the ESM program and review. Let me give you a little bit further flavor regarding the ongoing review, the second review of the ESM. You know, the requirements for the conclusion of the second review of the EMS program are for our European partners to decide, number one. And what concerns a potential Fund financing program, we have made it clear that we need to see that the program adds up before we can recommend it to our Executive Board for consideration.

And, again, to repeat what we've said in communications, and senior management of the Fund has said many times, we do not think Greece needs more austerity now, and we can go along with a program with a primary surplus target of 1.5 percent of GDP, consistent with the policies now underway, and a commensurate debt relief. But if Greece and its European partners decide on a higher primary surplus for a temporary period, we would need to evaluate the policies that could credibly support that target.

So in our view, there's a number of reforms that we've articulated in the past, and they're long overdue, and we think they would be necessary to support a higher target and to allow for a more equitable distribution of the burden of economic adjustment in Greece. But any reforms in support of an ambitious medium-term fiscal target should be implemented only once the output gap closes and to minimize the negative impact on just an early recovery in Greece.

QUESTIONER: If I may, it seems to me that you are in disagreement with both, with Greek government and with your European partners. If the Greek government insists on not taking additional austerity measures -- the prime minister said so; he made a statement yesterday -- and if the Europeans do not deal effectively with that issue, what are you going to do? So simple.

MR. MURRAY: It may be simple, but let's wait until we make those simple decisions as you characterize. I can't -- you're asking me to leap ahead of a process that's underway right now, as you well know. Until that process plays out I'm not going to speculate.

You, and then him.

QUESTIONER: I'm a bit confused. In practice, does the second review go hand in hand with IMF participation? Because the second review has been delayed. I know that you're not part of this current program, but increasingly in Europe people are saying that unless -- European officials meaning -- that unless the IMF is part of the program, the ESM program will not proceed either. So it becomes -- do you feel the pressure by your European partners to decide in order for this ESM program to still stand, and Greece not come to you afterwards without any European program, just for IMF funding? And also do you feel the pressure that you have to take that decision by February? Some officials are saying.

MR. MURRAY: Yeah. I mean hopefully by the end of the process, we’re not all confused, right, so I think it will be clear as we go along. As we have said, and I’m just repeating, we’re fully engaged in the process. I mean, some of what you’re asking me there is really for the Europeans to explain, not the IMF.

We are fully engaged. The managing director has made that clear, that we remain fully engaged in the process, and we will see how it plays out in the coming weeks. But I don’t have any specific deadlines to set or any issues to raise in that context.

QUESTIONER: Still on Greece, actually. One point of detail, first. The DSA will be part that you’re going to publish, right?

MR. MURRAY: Correct.

On this time line, the IMF missed its own deadline in the last year, because you were saying that you were going to make a decision by the end of the year, which you did not.

My question is, is it really realistic to assume that the IMF can make a decision before elections in France and Germany? I’m not talking about a general deadline, but l can you guarantee you are in the position of making a decision this year in spite of these electoral events?

MR. MURRAY: Yeah. You know, I can’t make any guarantees in any context, whether its European, Asian, Western Hemispheric. Putting together a program is a complicated process, as you all know. There are many variables, many dynamics.

We are actively engaged in Greece. The Europeans have been actively engaged on Greece for some time. I can’t speculate on what election factors -- what role election factors will play in IMF timing. In the end, it boils down to policy implementation or policy commitments and implementation.

Beyond that, I can’t speculate about what the implications of elections in various European nations will mean for the Greece program.

QUESTIONER: How long can it last? You’ve been talking about that for maybe more than a year now. Can we expect a decision by the IMF this year, by the end of the year?

MR. MURRAY: Well, we’re working in concert with the Greeks and the European partners to try to come to an agreement as soon as practical and possible.

QUESTIONER: So, can it happen this year, by the end of the year?

MR. MURRAY: I’m hoping. We have to be hopeful that we can come to agreement soon, but I can’t --

QUESTIONER: By the end of the year?

MR. MURRAY: You’re asking me to speculate. I hope we have an agreement, you know, certainly.

QUESTIONER: By the end of the year?

MR. MURRAY: I hope, I would hope, right, but I can’t -- we would hope for something as soon as possible. That’s all I can say. I mean, we are very hopeful.

QUESTIONER: From the IMF perspectives, do you feel you have to wait for a new representative, a new Executive Director by the U.S., in order to make that decision?

MR. MURRAY: The impact of -- the Executive Board, as far as I’ve seen, is fully functional. We have had a number of activities, so it’s fully functioning. I’m not aware of any issues regarding what you just raised. No, I’m not aware of that being a specific issue.

QUESTIONER: Recently, Mr. Schäuble said that for the very first time it is possible to have a good program without the IMF participation, and the German media says he has been preparing alternative plans. My question is can you comment on that? There seems to be a new discussion about the scenario.

MR. MURRAY: I don’t have anything specific other than to refer you back to the statement that was issued after Mr. Schäuble and the Managing Director met in Davos. That’s all I have on that.

Let me take a couple more here on the screen. This is from Valor Economico in Brazil. I would like to know if the IMF is going to release any report about the end of TPP.

Okay. That is the Trans-Pacific Partnership.

Let me just say a few things on trade, first of all, and then I’ll get right to her question. Trade has been an engine of growth for both the U.S. and the global economy. Countries also need to pursue policies that better extend the benefits of trade, openness, and integration to all, while alleviating the negative side effects of globalization, so making globalization work for all.

The objective of open trade conducted under fair rules that are well enforced is a shared objective, while implemented trade agreements can be an important source of economic prosperity for all concerned.

Now, specifically to the regional trade arrangement that she from Valor Economico just referenced, it’s really up to the countries that are involved to move this issue forward in one fashion.

What we would like to see is that all countries look for paths to closer trade integration, whatever you call it. As I said at the top, trade has been an engine of growth for the global economy, and that’s a good thing.

QUESTIONER: How do you react to the agenda of President Trump to retreat from the TPP? Are you disappointed by this move?

MR. MURRAY: Good question. Like I said, it’s up to the individual countries to set their own course. What we hope to see is a path to closer trade integration. What paths are taken, you know, you have to see what paths are taken. A little early. It kind of gets back to some of the other questions about Administration policies. It’s very early.

QUESTIONER: There has been some speculation because the decision has been made. I’m just asking you are you concerned by the decision?

MR. MURRAY: We want to see closer trade integration. We’d like to see what comes out of that, so it’s not over. They have taken a decision, but we’re not sure what the follow up to that decision is. I think that still remains to be seen.

Trade, as you know, is a pretty complex public policy issue, and we see many administrations when they first take office that trade is actively debated, trade policies amended and adjusted. We have to see where this heads.

Our basic hope and desire is to see that countries pursue the benefits of trade and openness and integration.

QUESTIONER: Who participated today on your behalf in the Eurogroup? I have seen some report that Mr. Thomsen didn’t go.

MR. MURRAY: I’ll have to get back to you on that. It may be Delia. I have to double check on that; I’m not positive.

QUESTIONER: There are reports that Mrs. Lagarde and Mr. Schäuble agreed for the IMF participation in Davos. Do you deny these reports?

MR. MURRAY: Deny? I mean, basically we stated in Davos we remain fully engaged in the process. That’s what we said.

QUESTIONER: But the reports actually said they agreed for the IMF participation.

MR. MURRAY: I’m not denying anything. We’re still fully engaged. What we said -- I get back to my original point, which is we’d like to see 1.5 percent primary surplus, so it’s in that context. Certain things have to fall into place, but we certainly remain --

QUESTIONER: (Inaudible)

MR. MURRAY: When we come to our Board, we have to have a program that’s sustainable, that adds up. We are still in that process.

QUESTIONER: (Inaudible)

MR. MURRAY: Like I said, I’m hopeful. We hope for the best.

QUESTIONER: I’m sorry. The question is about Russia and the Russian budget, the authorities decided on a different price for oil, to save it. I was wondering if the IMF had any comment.

MR. MURRAY: I don’t have anything specific on the Russian policies, on what they are doing with their oil savings at the moment. We always analyze these issues. We have said to the extent that what they do helps build fiscal buffers and acts to strengthen their fiscal rules, strengthening implicit fiscal rules and the approved 2017-19 budget. It would be a positive development, but I don’t have -- I can’t get into the specifics here.

QUESTIONER: All right, and then secondly, the court in London recently concluded the deliberations on the dispute between Russia and Ukraine on the Ukrainian debt to Russia. Three billion dollars of debt.

Again, is there anything that the IMF can share on that outcome so far?

MR. MURRAY: Yeah, I don’t have any comments on the court case, thanks. I’ll come --

QUESTIONER: How does the recent court ruling in the U.K. on Brexit affect the Fund’s expectation on the way Brexit will play out?

MR. MURRAY: I am not going to comment on the court ruling specifically, that’s up to the U.K. government to deal with.

We’ve been pretty clear it gets to what Maury Obstfeld said a week ago at the WEO update.

You know, growth in the U.K. has been stronger than we expected, but there are longer term issues with growth that need to be -- spillover effects that need to be grappled with. For example, you know, we continue to expect moderation of growth next year as the projected increase in inflation will reduce real household disposable income and consumption, while uncertainty on the terms of Brexit may affect business investment.

We’ll take a couple more questions because we had -- yeah, go ahead.

QUESTIONER: Just to follow up on that, as you know, British Prime Minister Theresa May is here in the States, and one of the things she wants to talk about with Donald Trump is a trade agreement, and I am just wondering what the -- obviously the IMF has certainly voiced some concerns about the effect of the U.K. leaving the sort of EU trade sphere. What effect would a U.S./U.K. trade deal -- would it mitigate some of that negative effect from leaving the European Union if they can pull off a bilateral trade deal?

MR. MURRAY: Let’s -- I can’t comment. Let’s see what the deal is, and then we’ll -- we might answer that question. I have to speculate otherwise. I will take another question here on Ukraine. It’s actually from the Union News Agency. Question on Ukraine from Union?

What can you say about the talks in Kiev? What can you say about the talks on the third review of the extended fund facility program? When can the Board meet and discuss it?

Okay, so managing director dealt with Ukraine and Davos, she was asked about it there. As she noted, good progress has been made on policies needed to complete the third review under the Extended Fund Facility arrangement.

We are in close contact with the authorities on a few remaining issues that need to be resolved, notably to finalize the memorandum of economic and financial policies regarding the timing of upcoming measures so that memorandum is in the process of being finalized.

Assuming all remaining issues are resolved soon, we expect to propose a completion of the review to the Executive Board in the coming weeks, but I don’t have anything more specific on exact timing of the Board meeting.

I’ve got a question here from a Zimbabwe economist, that’s a publication. What policy measures should Zimbabwe focus on this year in light of continuous economic -- in light of continuous economic decline since 2011?

Just a quick note on this. A comprehensive economic transformation plan will be important to ensure the viability of the dollarized Zimbabwean economy. The authorities need to take action to streamline public sector wages urgently. They also are encouraged to accelerate public enterprise reform, improve public financial management, develop key infrastructure and to strengthen the rule of law and to improve governance. That’s Zimbabwe.

I think I am going to take one last question from here, and then I think we can wrap up. Do we want to end on Greece or something else? We’ll tell you what we are doing.

QUESTIONER: I do have a question.

MR. MURRAY: Okay.

QUESTIONER: I was wondering whether -- since this decision -- not decision but this (inaudible) about Greece will be on February 6^th, does this mean that your mission needs to be here until then, or if the Europeans decide to, you know, take the mission back to Greece, can you participate before the February 6^th discussion of the Board?

MR. MURRAY: I would assume so. I mean we are pretty nimble in terms of making sure we can do missions. I don’t have anything specific to that, but it’s not -- I don’t see that as a major, as a logistical challenge or anything of that nature. Okay, well anyway, do you still -- okay, go for it, yeah.

QUESTIONER: The recent presidential administration has introduced a new measure of volatility into the Mexican economy. Is there anything that the IMF suggests for Mexico to do to gird itself for potential effects of this?

MR. MURRAY: Got it. Thanks for that question. Now on Monday, this past Monday, we had the Western Hemisphere Regional Economic Outlook, which dealt with Latin America and the Caribbean, and Alejandro Werner covered some -- covered this ground, but just to remind people what Alejandro said and what our current thinking is on Mexico.

Obviously too early to make a meaningful assessment given that there is significant uncertainty regarding the scope, focus, and modalities of trade negotiations, which creates the prospect for a wide range of possible outcomes. You know, as we said in our recently released Regional Economic Outlook update, we expect Mexico’s economy to continue to grow moderately but to enter difficult terrain.

The outlook is clouded by uncertainty about U. S. trade policy, which, along with tighter financial conditions will be a drag on activity.

Just as a footnote, the growth forecast we put out that was published on Monday, we’re 1.7 percent for this year and 2.0 percent real GDP growth in 2018.

QUESTIONER: You know on Greece -- as you know, the Republicans in Congress have been really critical of the financial support brought by the IMF to Greece, and I was wondering is it part of the equation for the IMF? You know, it seems in its decision making about Greece.

MR. MURRAY: I am not aware of that being a factor at this time. Okay, thank you very much. Again, embargo is 10:30 a.m. Washington time.

That’s approximately 20 minutes from now. If you have any follow up questions regarding today’s briefing, please contact media relations.

We will be happy to follow up with you promptly. If we elaborate on anything that we were unable to at this briefing, we will insert the updates into the official, the transcript that we publish later today. Thanks again for joining us, and we look forward to seeing you on February 9.