IMF Press Briefing On Nigeria, Argentina

(IMF, 23.Jul.2020) — Transcript of International Monetary Fund (IMF) press briefing on Nigeria, Argentina, and other countries.

MR. RICE: Good morning everyone and welcome to this press briefing on behalf of the International Monetary Fund. I’m Gerry Rice of the Communications Department. And as usual this morning, our briefing will be embargoed until 10:30 a.m., that’s Washington time. I’d like to extend best wishes to everyone out there. I hope you’re managing to stay safe and well.

Before taking questions, which have come in in advance and coming in as we speak, let me just step back a little bit and remind you of some of the activity here at the IMF in recent weeks. It’s been a number of weeks since I’ve been here at the podium, though we have had quite a bit of communication from the Fund in that period. But since it’s been a number of weeks, let me just give you a quick update on some of the activity here at the IMF to help our member countries fight the pandemic.

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Perhaps the best way of coming at it is just to remind a couple of things that our managing director, Kristalina Georgieva has said just a few days ago at the conclusion of the G-20 meeting of Finance Ministers and Central Bank Governors. We did issue a statement at the end of that meeting. A couple of the highlights.

The Managing Director reiterated that due to the continuing impact of COVID-19, the global economy faces a deep recession this year with partial and uneven recovery expected in 2021. At the same time, she emphasized that the unprecedented actions taken by the G-20 countries and others have helped to avert a much worse economic outcome. And as we enter the next phase of the crisis, further action will of course be required as well as increased international cooperation.

Specifically, support of fiscal and monetary policies will need to continue as needed until we can secure a safe and durable exit from the crisis. And as Kristalina Georgieva emphasized and this was one of her main messages, premature withdraw of fiscal support could derail the recovery and incur larger costs. So again, it’s important that the supportive actions, fiscal and monetary, continue as needed at this stage in the crisis.

There was a lot of discussion at the G-20 on debt and the Debt Service Suspension Initiative in particular. The IMF highlighted its importance, especially for those countries struggling with high debt or dependent on hard hit sectors, tourism for example. And the Managing Director expressed her hope that consideration will be given to extending the Debt Suspension Initiative.

She also noted that to make it even more effective, we need greater private sector participation and greater debt transparency and that both of these things should be strongly supported. So far, 41 countries have made formal requests under the Debt Suspension Initiative. That’s more than half of the potentially 73 countries that could be eligible under the Debt Suspension Initiative.

Looking more broadly at the IMF’s support to our countries, our member countries in the crisis, we have moved, as I’ve said here before, with unprecedented speed. It’s actually historic in many ways, providing emergency financing at this stage to 72 countries in just under four months totally $25 billion just in that emergency financing. And again, to remind, this financing helps to create fiscal space for those countries so that they can support people, lives, and livelihoods. And that financing comes without the traditional IMF conditionality.

We have also provided immediate debt relief to all 29 of our poorest member countries who are eligible under the Catastrophe Containment and Relief Trust. And that’s been totaling about $251 million in debt relief provided directly by the IMF so far.

Looking ahead, we see especially pressing needs by low income countries and small and fragile states. We expect our concessional credit to low income countries to triple as a result of the impact of the crisis and our efforts to help our members mitigate it. In this context, we’re also looking at different ways to help them, including by making better use of existing special drawing rights, SDRs. That’s to help the poorest countries and Kristalina Georgieva referred to that in her G-20 statement a few days ago.

Looking more broadly, the Fund has about a trillion dollars available to help our membership. As things stand, we have a total exposure at this point of about $250 billion and around one third of that has been approved since the crisis began. So, that kind of breaks down the resources that the IMF is making available to our member countries in this unprecedented crisis.

And in that context, I would highlight that just over the last several days, our Executive Board has decided to temporarily increase the annual access limits to financial support from the IMF. We announced this, we had a communication on this a few days ago. That’s a temporary increase in our annual access limits.

The reasoning behind that is that many countries have already received IMF emergency funds as I indicated. And so, they have reached or were approaching the relevant limits for annual access to Fund financing. So, raising the annual limits, as our board just decided to do, allows these countries to receive higher levels of financing within the current year. So, it gives countries immediate short-term access to these funds in this time of crisis.

Let me conclude with a few event announcements. As I mentioned, we continue to be active with our communication, even in this virtual world that most of us are operating in now. On Wednesday, July 29th, Kristalina Georgieva will be interviewed by the New York Times. The gender director there at a live session on the Women’s Forum for the Economy and Society, looking at the impact of COVID-19, particularly on women and girls and ways to address it. This will be also posted on YouTube, available to you. And you may have noted the blog on this topic published by the Managing Director and several IMF colleagues just a few days ago on COVID-19 and the gender gap. I did note that a number of you reported on that blog, on that important issue.

So, the day after the New York Times, Kristalina Georgieva will have a livestream conversation with Ian Bremmer of the Eurasia group. Ian is familiar to many of you. That discussion will be moderated by Foreign Policy Magazine. Ravi Agarwal will be moderating that and that’s completely open, you’ll be able to join and view the event live.

And importantly for your calendars, August 4th, Tuesday at 9:00, Gita Gopinath, our chief economist will launch The Fund’s external sector report which, as you know, is our yearly assessment on external imbalances world-wide. I know this is something many of you take a great interest in, so August 4, Agita will be doing that. And we’re doing that in partnership this year with OMFIF. That’s the Official Monetary and Financial Institutions’ forum, and in conversation with Mark Sobel of the OMFIF on August 4. We will be providing more details on that, but that’s the external sector report being published on August 4.

Thank you for your patience in allowing me to recap some of those activities and thank you for sending a number of questions in advance in this virtual format in which we’re operating. Let me turn to your questions, try and take as many as I can, and looking at some that are coming in, I will try to identify who’s asking these questions. And, again, thank you for the courtesy of sending them in in advance. It does help us.

I want to talk about Spain and the first couple of questions are from questioner in Spain. Asking, I’d like to know what the IMF thinks about the large about of money that Spain will receive from the EU under the recovery fund just approved, and if you think the country will be able to survive the crisis?

Our Managing Director Kristalina Georgieva has said that we applaud the EU leaders for their determination in reaching an agreement on the €750 billion recovery package announced a few days ago. Indeed, for countries such as Spain which are particularly hard hit by the pandemic, this package will be an important contribution to help support the recovery in Spain, the recovery of the economy, and Spain’s transition more medium and longer term towards greater inclusiveness and a more resilient recovery and economy.

Questioner had a second question, what about the regrowth of the virus in Spain? He says, do you think that will halt the recovery? Tourists are cancelling trips, he says Localized outbreaks or a second wave are risks going forward, not just to Spain, of course, but to many countries, and to all of us in many ways. And it makes the economic outlook highly uncertain. Again, not just in Spain, but pretty much everywhere.

Our latest growth project for Spain which was published about a month ago in the World Economic Outlook was a contraction of 12.8 percent in 2020, and then recovery of 6.3 percent in 2021. That’s our current forecast. And that already akin to account, or at least under consideration, the possibility of localized outbreaks and potential targeted new limitations on contact-intensive activities. We will update that outlook for Spain and for all countries in October.

And, again, let me just say I think with the agreement on the EU recovery package, this is an important factor that’s being put in place, I think, for a stronger recovery in Spain and in Europe more broadly. We see it as a very positive development.

I want to turn to Nigeria. A couple of questions, one from questioner, asking has the IMF supported Nigeria to fight the pandemic? How much and when? To which I can say that, yes, we have helped Nigeria alleviate the impact of COVID-19. Nigeria hard hit, including by the pandemic and the fall in oil prices, and did request IMF emergency assistance which has been approved some time ago, $3.4 billion under our Rapid Financing Instrument.

This was actually done towards the end of April. And, again, provides critical fiscal support to ensure urgent healthcare to help shield jobs and businesses. And, you know, this RFI provides very rapid financial assistance in that context without countries having the need for a full-fledged IMF program. Again, as I mentioned at the top of this press conference.

There’s a second question on Nigeria from questioner. Foster is asking since the IMF did support Nigeria, have you secured agreement that this money will be properly used, and that the incoming government will not be plunged into debt as a result? Also asking, how will the IMF measure that this money is properly used?

So, you know, I’ve talked before here about the importance of whilst there is no traditional IMF conditionality on these emergency funds, there is an emphasis on accountability, and transparency, and good governance of these funds. In the case of Nigeria, to enhance transparency and governance, the Nigerian authorities have committed to several accountability measures. Specifically, conducting an independent audit of crisis mitigation spending and related procurement processes, publishing procurement plans and notices for all emergency response activities, including the names of awarded companies and beneficial owners. And creating special budget lines to record all crisis emergency response measures which are published daily on Nigeria’s Treasury On-Line Portal. So, the digital access helping to promoted transparency in this case.

And these measures will not only ensure that the financial assistance received as part of the COVID-19 response is used for its intended purposes, but also significantly strengthened the oversight of the entire budget process and resources being used for the government’s crisis response.

We got some questions from questioner , including on Zambia, and he was asking, what’s the state of play? What’s the IMF’s thinking? What does the IMF think the role of debt to China in the nation’s current situation?

I have spoken about Zambia recently here at the podium. In terms of the current status, yes, the Zambian authorities have requested IMF support for their economic program to restore macroeconomic stability, as well has assistance under our emergency financing to help address the human and the economic impact of the pandemic.

I can tell you, that a virtual IMF staff mission took place June 22 to July 10 to discuss the emergency financing request. Progress was made, but discussions continue as the authorities determine their policies and priorities in the context of their revised 2020 budget, as well as the medium-term fiscal stance needed to restore debt sustainability, revive growth and reduce poverty. That’s where we are on Zambia.

Our colleague who normally attends these press conferences, is asking about India; a couple of questions from Lalit. Does the IMF have a revised assessment of the economic situation in India? No, we do not have a revised assessment. It remains as of, you know, three or four weeks ago, when we did the WEO update. There will be a update on that with our full-fledged World Economic Outlook, coming in October, for India, and for all countries.

For India, what we said is that growth was projected at -4.5 percent, and then six percent recovery, for fiscal year 2020-21 and fiscal year 2020-22, respectively. Our projection for fiscal year ’20-2021 was revised down, as was the case for most countries driven by the impact of the pandemic.

On balance, I think we would say the risks to the economic outlook remain as we say tilted to the downside, despite a gradual recovery in activities and a solid agricultural performance. The main downside risk is, of course, the continued spread of the pandemic. Further outbreaks could require additional lockdowns, and concerns about the virus could also dampen consumer confidence and delay the economic recovery. Again, this is the case not just in India, but in many countries.

Questioner’s second question is: in recent weeks, several international companies, like Facebook and Google, have announced a foreign direct investment in India, amounting to over $20 billion. What does this say about Indian economic reform, or the investment climate, more broadly, in India? Concerted efforts have been made in recent years, in India, to strengthen the business climate and encourage investment in trade, and these have helped to attract investment and improve the current account financing mix and also help to contain external vulnerabilities.

Relevant reforms have included the new bankruptcy code, the National Goods and Services Tax. These have helped to gains in India’s doing business ranking, moving up rapidly in the World Bank’s ease of doing business index, up to 63 in 2020, from 100 in 2018, significant progress there, indeed. And, nonetheless, further economic reforms, including labor, product mixed land, and others, and additional infrastructure investment are necessary, in our view, to attract even more investment, and to ensure sustainable and more inclusive growth in India.

I’m turning to Latin America and Argentina, where a large number of questions The questions coalesce around the latest proposal from Argentina to its creditors, related to the debt restructuring effort that is ongoing there. The negotiations between Argentina and the private creditors are ongoing, and the questions are around that.

Does the IMF consider that Argentina could make a renewed effort? Has the IMF been consulted? In what capacity does IMF react? Does IMF think the process is taking too long? Is there any talk of starting talks with the IMF earlier than previously planned? This is the crux of those questions, to which I would make the following statement.

The Argentine authorities continue to seek an agreement with their private bondholders to restructure their sovereign debt, and as we have said before, and in line with our longstanding practice, the debt negotiations are a bilateral matter for Argentina and its creditors. This is the case in Argentina. It’s the case more generally. It’s always the case, actually, that this is a bilateral matter for the country concerned and for its creditors, and that’s true, also, in the case of Argentina.

We hope all parties involved will continue to work constructively and in a timely fashion, with the goal of reaching an agreement that would put public debt on a sustainable path and set the basis for inclusive and durable growth going forward. So, again, we are hoping that all parties involved will continue to work constructively and in a timely way.

There was a second clutch of questions on Argentina, around IMF, an IMF program, the possibility of that program, negotiations around that program. Thank you for your questions. When will the negotiations on the next IMF program begin? Could there be negotiations even without an Article IV consultation?

On those questions, I would say — I would reiterate the Argentine authorities have not requested Fund financing, at this stage. They have not requested an IMF program, at this stage. So, I don’t have any new information to share, in terms of timing. I can say that it does not have to be necessarily tied to an Article IV consultation. So, that was one of the questions. If and when such a request were to occur, the financing associated with a new IMF supported program would be to help Argentina meet its balance of payments needs, including those related to its official sector obligations, and, again, this is a general principle that applies beyond the specific case of Argentina.

Let me leave it there on Argentina and turn to Lebanon. I want to recognize questioner. Thank you for your questions. Questioner is asking, essentially, for where do we stand on Lebanon, the discussions with the IMF around its support, can I give any information on negotiations? The pace seems to be a bit slow, says questioner. So, those are the bunch of questions from questioner.

Again, I’ve spoken quite a bit about Lebanon, the last few times at the podium. Kristalina Georgieva, the Managing Director, has talked about Lebanon recently, just a few days ago. Actually, she’s spoke to Al Jazeera and Al Al Arabiya on Lebanon, and Jihad Azour, our Director for the Middle East, has also, you know, made some comments on Lebanon, as has the team in our Middle East and Central Asia Department. So, I — the bottom line is I don’t have much to add to what’s been said in recent days, and I would really just refer you to those more recent comments, particularly by the Managing Director just — just a few days ago. They were widely reported and are easily available.

I going to end the questions by turning to questioner. Thank you, Simon. He’s asking can you give us an update on financial assistance to the Sub-Saharan Africa Region? IMF assistance: how many countries? How many have applied? How much has been dispersed? And then he is asking what about South Africa?

On Sub-Saharan Africa, let me just run through some numbers for you. IMF emergency assistance we’ve received somewhere around 35, 40 requests from Sub-Saharan African countries for our emergency financing to help fight the — the crisis. Plus, you know, what we call augmentation of existing arrangements. So, where we may already have had a program, adding additional resources where we can. And the total amount is in the order of about $16 billion dollars.

Of those requests, 29 totaling approximately 10 billion dollars have been approved and I’ve said before, 10 billion dollars in the context of Sub-Saharan Africa support from the IMF is unprecedented. In a normal, in an average year let me say, the — the average lending from the IMF to Sub-Saharan Africa would be 1 billion dollars and as I’ve just said so far this year, it’s 10 billion dollars. So, it’s roughly 10 times the average IMF assistance to Sub-Saharan Africa and we are in July, just this year.

On debt relief which the IMF has been providing to Sub-Saharan African countries under our Catastrophe and Containment Trust might have had — had — hear us reference this, CCRT . This is where we provide grant — grant financing to countries to help them cover debt service obligations to the IMF. We have a — up to 22 countries we — we — we think can benefit from this CCRT debt relief. And under the first six months stretch actually, 21 Sub-Saharan African countries have received debt relief exceeding $ 200 million dollars from the IMF.

So, I hope those numbers are helpful. I know you follow this closely.

Let me turn to South Africa and I will end with questioner’s question about Sub-Saharan Africa. I can confirm that’s — let me see, South Africa. I can confirm that South Africa has requested support from the IMF. Again, emergency financing like 71 other countries all around the world have requested, and they’ve requested this assistance to access, to — to help them address urgent balance of payments needs arising from this external shock that a — they — the pandemic has excuse me, given to so many countries.

And again, I — I note that — that Sub-Sahara — that South Africa’s request is one of 72 countries that we have been providing assistance for. So, what I can tell you is that this request from South Africa will be considered by our Board on July 27th. So, that’s this coming Monday. And as always, our Board will make the decision on approval and on the amount. So, stay tuned. You will hear more about that, more about South Africa on Monday.

And with that I am going to bring this press briefing to a close. I do want to thank you for joining and I want to thank you for your patience with this virtual format. We are looking to improve this as much as we can. We will take a little bit of a hiatus because our Board goes into recess for a couple of weeks in August. So, we will go into a bit of a hiatus on the press briefing. The IMF will not go into hiatus. We continue working at this rapid speed and service to our membership, doing as much as we can to help countries in the midst of this crisis.

So again, stay safe and well everybody and we will see you soon and thanks for joining today.

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