Transcript of IMF Press Briefing
07.08.2025 - 18:00:24MS. KOZACK: Hello, good morning.
QUESTIONER: Good morning. I was wondering, well, first of all, with Minister Luis Caputo traveling to DC for the Spring Meetings, if you can comment on the negotiations of a new program, if that's in place, and if it's going to be part of that agenda? And also, we had some recent indicators of the economic activity falling abruptly in tax revenue and production. And I was wondering if the economic activity is falling more than expected, according to your measurements?
MS. KOZACK: Okay, thanks, All right, so let me start, let me take these questions. So let me just step back and again give the lay of the land.
The Argentine authorities are decisively implementing an ambitious stabilization plan to restore macroeconomic stability. As you know, the plan is centered on establishing a strong fiscal anchor that eliminates any Central Bank financing of the government, along with policies aimed at bringing down inflation, rebuilding reserves, and tackling distortions and other longstanding impediments to growth. Progress so far has been impressive. A fiscal surplus was recorded in January and February for the first time in over a decade. International reserves are being rebuilt, inflation is falling more quickly than anticipated, and market indicators, such as the FX GAAP and sovereign spreads, are continuing to improve.
The path to stabilization is never easy, and it does require steadfast policy implementation. It will be important to continue improving the quality of fiscal adjustment and while monetary policy will also have to adapt during this transition. We also, very importantly, welcome the authorities' recent efforts to scale up social assistance on the well-targeted flagship child allowance program, as well as to protect the real value of pensions. Similarly, it remains important to work pragmatically in building social and political support to help ensure the durability and effectiveness of reforms. The team, the IMF team, and the Argentine authorities are engaged in active discussions in the context of the current IMF supported program. Our goal remains to support the authorities' efforts to restore macroeconomic stability and set the basis for prosperous and inclusive growth in Argentina.
At this time, it would be premature to discuss modalities for a potential future program. With respect to the exchange rate, the authorities are using a comprehensive set of measures to bring in place inflation down. As I already noted, this includes the establishment of a strong fiscal anchor with no Central Bank financing. And of course, this needs to be complemented with a consistent and well communicated foreign exchange and monetary policy to durably support reserve accumulation and disinflation. The fact that inflation is falling more quickly than anticipated is, as I noted, a very positive development in this regard.
Okay, I see. I have a question online. Please go ahead.
QUESTIONER: Thank you, Julie. Good morning, everybody.
MS. KOZACK: Good morning.
QUESTIONER: I just wanted to ask about Pakistan's SBA, actually. What we have seen, like, do you think institution feels Pakistan's economy is out of words after IMF's last SBA and what kind of GDP growth IMF is projecting this fiscal year?
MS. KOZACK: Okay, very good. Any other questions on Pakistan? I think if you're online and you have a question around Pakistan, just go ahead and jump in. Okay, nothing else in Pakistan that I'm seeing.
Okay. So again, let me step back and give you the overview. So, on March 19, IMF staff and the Pakistani authorities reached staff level agreement on the second and final review under Pakistan's Stand-By Arrangement, SBA. This is subject to approval by the IMF's Executive Board. Upon approval by the Board, Pakistan will have access to around $1.1 billion, and that would bring total disbursements under the SBA to about $3 billion. We do expect the board meeting to take place in late April. The agreement recognizes the strong, the staff level agreement, recognizes the strong program implementation by the State bank of Pakistan and the caretaker government in recent months, as well as the new government's intentions for ongoing policy and reform efforts to move Pakistan from stabilization to a strong and sustainable recovery.
Pakistan's economic and financial improvement has improved in the months since the first review was completed. Growth and confidence are continuing to recover. And we will be releasing in the next weeks as part of our World Economic Outlook, our latest growth forecasts for Pakistan. So, I will refer you to those documents and those press conferences. The authorities have expressed interest in a successor IMF supported program with the aim of resolving Pakistan's fiscal and external stability challenges and laying the foundation for inclusive growth. And, of course, we stand ready to engage in program discussions in the coming months.
Okay, and now let me maybe come back to the room. Go ahead.
QUESTIONER Thank you. I was wondering if you could provide updates. I have a couple of questions on Kenya, Nigeria, Rwanda, South Africa, Zambia, Seychelles, and also Senegal. Specifically, Zimbabwe, this week, is the latest southern African nation to declare a drought state of emergency. Malawi, Zambia, have made similar announcements in the past three months. What is the Fund doing regarding addressing this climate crisis in southern Africa?
My other question is in Kenya, President Ruto announced that there will be a 12 percent cost in July, as part of the government effort to balance the budget in the next three years. So, what do you think about this move and the micro, as well as the macroeconomic impact that we have on the Kenya economy? And the other question on Kenya, is the doctors have strike, are on strike for the past three weeks now, and they are turning away a lot of patients from the hospital. Do you see the impact of this as well as this latest move that the president is planning to make in Kenya?
And if you can also provide any updates on Haiti. The last time that you said the IMF has a mission that they were meeting virtually with authorities in Haiti. So, if you can also provide information on that.
MS. KOZACK: Okay, very good. So that's a quite long list. So, what I think I'm going to do is I'll start with the Zimbabwe and the drought question, then we'll turn to Kenya, then I'm going to go to some others, and then if I have time, I'll come back. Otherwise, we'll get back to you bilaterally on the long list.
QUESTIONER: Okay.
MS. KOZACK: So, starting with Zimbabwe and the drought and the fact that it's affecting several countries in Africa. I think it's important to start by saying that we have seen, over the last several years and decades, an increased frequency of climate shocks globally. And Africa has been particularly hard hit by these climate shocks, and we see this, of course, happening now with these droughts in Zimbabwe, Malawi, and Zambia. The IMF remains committed to supporting Sub-Saharan African countries. These successive shocks, including climate shocks, have underscored the importance of the IMF's role as an essential component to Sub-Saharan Africa's safety net, particularly for countries with limited policy buffers. Since the beginning of the pandemic in 2020, the IMF has provided almost $58 billion worth of financing to Sub-Saharan Africa, most of it on highly concessional terms.
And with respect to supporting countries build resilience to climate shocks, there are currently nine countries in Sub-Saharan Africa that have arrangements approved under our Resilience and Sustainability Facility. They are Benin, Cabo Verde, Cameroon, Cote d'Ivoire, Kenya, Niger, Rwanda, Senegal, and Seychelles. And we have received many more requests for support under this instrument, and we will continue to work with countries.
With respect to Kenya, right now, we have a team actually on the ground in Kenya discussing with the authorities the 7th review under Kenya's programs supported by the IMF. The team is undertaking a full assessment of recent developments, including program performance and all of the traditional areas economic developments. So, the team will communicate its findings in due course. And I'm not going to comment further on Kenya while the team is on the ground.
QUESTIONER: Thank you, Julie. Good morning.
MS. KOZACK: Good morning.
QUESTIONER: I just had a quick question on Niger and Tunisia. I wanted to have an update about the situation on the conversation you might have with the authorities on those countries and when might we expect an Article IV for them? And also, more generally, we've heard one of the members of the board from the Federal Reserve here, assessing that long-term rates might be around 3 percent in the U.S. We might expect, as well, higher rates at the AC. Beyond long-term, I wanted to know what might be the consequences for already in distress countries that are in the verge of distress - debt countries with a decade coming up with largely higher rates than we had the previous decades. Thank you very much.
MS. KOZACK: Okay. Thank you. So, starting with Niger. So, just to give you an update, the IMF has two arrangements with Niger. We have an Extended Credit Facility, as well as a Resilience and Sustainability Facility. A team very recently visited Niger in early March, met with the prime minister and other senior officials to discuss recent developments and the implementation of the Reform Agenda. Preparations are now underway for a Review Mission for the ECF and the RSF supported programs, and we expect that the Article IV Consultation would be expected to be presented to our board later this year.
And then you also had a question on Tunisia. Tunisia is currently benefiting from economic tailwinds, the growth remains subdued, and unemployment is high. In Tunisia, favorable terms of trade and tourism, together with the three-year wage agreement, has helped reduce external and fiscal deficits in 2023. And these factors are likely to persist in the near term. And like with all countries, we will be presenting our full update as part of the WEO and of course, the Regional Economic Outlooks. The Fund, the IMF, is committed to supporting Tunisia in its reform efforts, and we will continue to engage with the authorities in that regard.
Now, with respect to your question on long-term interest rates, I'm going to draw your attention to a chapter that our team wrote last year as part of our World Economic Outlook. This was an analytical chapter that was prepared, I think it was chapter two, in April of 2023, and this chapter looked at what's called the neutral rate of interest. So, in that chapter, what we found, our analysis found that the recent increases in real interest rates, so that's the nominal rate, less inflation, are likely to be temporary. When inflation is brought back under control, we expect advanced economies central banks to begin to ease monetary policy, and that would bring real interest rates back toward the pre-pandemic levels. Those were the findings of that chapter.
Now, having said that, kind of how close to the pre-pandemic levels real interest rates may ultimately come to, depends on, obviously, developments in the world economy. And the chapter also includes a number of different scenarios which show different potential outcomes. So, I would just draw your attention to that chapter for the Funds analysis in that regard.
QUESTIONER: Thank you, Julie. Forecasts for Germany's economy are getting worse after knowing that the gross domestic product fell by 0.3 percent in 2023. How do you see this year for the country? How can this affect the Eurozone and to countries like Spain? This is one of my questions, and I also would like to know if, do you have any update about possible agreement with Ecuador?
MS. KOZACK: Okay, so starting with Germany. So, our latest forecast for Germany, like I've been for all other countries, will be released as part of the WEO on April 16. But what I can tell you so far is that Germany has avoided the dire scenarios that many feared following the shutoff of Russian gas. And this has been thanks to strong policy efforts to conserve energy, secure future energy supplies, and cushion the impact of high energy prices. The energy shock, tighter financial conditions and weak external demand are nonetheless weighing on Germany's near-term growth. Over the medium-term, Germany should aim to raise productivity by boosting public investment and cutting red tape, and that would boost, obviously, its growth over the medium-term.
In terms of the potential spillover effects, Germany is a country that has a strong industrial base and is a central hub to Europe's trade and value chains. In this well integrated setting, slow German growth is, of course, having some adverse effect on the rest of the Eurozone. That said, studies typically find these effects to be moderate. What we have found is that a negative shock to German growth of 1 percentage point in reduction in near term growth affects the rest of the eurozone by 0.1 percentage points. And these studies have found that shocks to U.S. growth actually have a bigger impact on the rest of the Euro area. So, there is an impact, but we do assess it to be moderate.
On Ecuador. Okay, so on Ecuador, the authorities have requested and IMF supported program. Our staff are actively engaging with the authorities to assess the economic situation and support their efforts to address the challenges that the country is facing. The macroeconomic and fiscal situation are part of those challenges, amid an ongoing security crisis in the country. The government has taken important policy steps to address the current liquidity crisis that the country is facing, as well as the fiscal situation. We certainly hope that the security situation continues to improve for the safety and well-being of the Ecuadorian people. In addition to efforts to enhance public safety, policies should focus on ensuring macroeconomic and fiscal sustainability and creating the conditions for stronger and more inclusive growth.
QUESTIONER: Thanks a lot. I wanted to ask one that came up, I was thinking would come up is Ethiopia. I know that there was a team there till Tuesday, but there was no agreement reached. And the Paris club has, I guess, extended its deadline. Do you expect that to be addressed in the Spring Meetings? What can you say about Ethiopia? The other one is smaller, but spicy. In Papua New Guinea, the opposition is saying that the opening of a permanent office and the ascending of a resident representative is either shows dysfunction or is a challenge to sovereignty. And I just wanted to know what is the IMF's thinking in assigning a resident representative there. Thanks.
MS. KOZACK: Very good. Okay, so starting with Ethiopia. Oh, hold on. I see online, we have a question online on Ethiopia. Please go ahead.
QUESTIONER: Thank you. Sorry about earlier, there was technical issues.
MS. KOZACK: No, no problem.
QUESTIONER: Thank you, Julie. The Ethiopia question is, how did the Ethiopian government fall short for getting a deal after the recent visit? How likely is that there [will] be a loan agreement after the meetings that are coming up?
MS. KOZACK: Okay, very good. Okay. So, on Ethiopia, we have received a request for financial assistance aimed at helping Ethiopia address the significant challenges it is facing. And those challenges include food insecurity, humanitarian needs, post conflict reconstruction, and high inflation. The request is also for the IMF to support Ethiopia's homegrown Economic Reform Agenda, which aims to fulfill the country's considerable economic potential. An IMF mission visited Ethiopia, from March 19 through April 2, to hold discussions on the authorities request for the program. Building on earlier discussions, the team made substantial progress toward establishing ways that the IMF can support the authorities economic program. These discussions are continuing and will continue at the upcoming Spring Meetings, which will begin in just a few weeks.
And then on Papua New Guinea, I think what I can say with respect to the opening of a Resident Representative Office is that we do have a program. The IMF does have a program with Papua New Guinea. It is standard practice for the IMF to have a Resident Representative Office in cases where we have a program with the country. In this case, the time difference between Washington and Papua New Guinea of 14 hours makes having an office and personnel on the ground, I would say, even more important. And what do those representatives, our Resident Representatives, do on the ground? Of course, they help support the team in monitoring the program. They engage very closely with the authorities to help ensure that communication and information flows well. But they also - the Resident Representatives - also engage very much with the local community because, of course, ultimately, building strong social support for reforms under an IMF program is, of course, important. [VHLP4][ZJ5][VHLP6]
Let’s see,[VHLP7] I have a question online on India from Lalit Jha from the Press Trust of India. And the question is, India's Executive Director at the IMF, K. Subramanian, recently projected a growth of 8 percent for India, which is different from the IMF's projections. What is your take on it?
So, on India, what I will say is, first, I just want to start by explaining a little bit the different roles at the IMF. So we do have an Executive Board. That Executive Board is made up of executive directors who are representatives of countries or groups of countries, and they make up the Executive Board of the IMF. And that's distinct, of course, from the work of the IMF staff. So, the views conveyed in the particular article by Mr. Subramanian were in his role as India's representative at the IMF.
As for the staff's views, first, as I've said already, we will be updating this in the WEO, which will be coming in the next couple of weeks. But our growth projections as of January were for medium term growth of 6.5 percent, and that was a slight upward revision relative to October. Again, we will be presenting the latest forecast in just a couple of weeks.
And I think with this, I'm just looking online. Let's see, I have a couple of hands up online. I have Libby.
QUESTIONER: Hi, Libby George with Reuters. Can you hear me?
MS. KOZACK: Yes, we can hear you.
QUESTIONER: Okay, great. Thanks for taking the question. I have a couple of questions we wanted to ask about Ghana, which is in talks currently with its holders of its international bonds. Wanted to see if the IMF expects them to get a deal before the Spring Meetings. And also, in terms of countries under common framework discussions, there's been a lot of concern about transparency with those talks. You know, private bondholders being able to see the terms of the OCC, for example. Wanted to know what, if anything, the IMF is expecting to do, if we can expect any announcements or any movement on that at the Spring Meetings?
MS. KOZACK: Okay. On Ghana, on Ghana, unfortunately, I don't have anything for you at the moment, so we're going to have to get back to you bilaterally. I really apologize for that, Libby, but we will be sure to get back to you. And I have, I see one other hand up online. Unfortunately, I can't read the name from the distance, but if that person wants to come in, I'm happy to try to take that question, if it's not on Ghana.
QUESTIONER: Yes. Julie, hey, it's Eric Martin with Bloomberg. I wanted to ask you about where things currently stand with Zambia and whether you expect there to be a deal reached there with commercial creditors. How soon you expect that to happen with the remaining commercial creditors, of course, after the Eurobond agreement reached in recent weeks?
MS. KOZACK: Okay, great. Thanks, Eric, so you will be the last question of the morning. All right, so let me step back and talk a little bit about Zambia. So, in 2023, Zambia's economy showed resilience, with real GDP growing at 4 percent, broadly in line with the projections under the program. The 2024 outlook for growth has deteriorated due to the drought. We discussed a bit the drought earlier, as well as a slower than projected rebound in mining production. These will put pressure on the budget, external balance, inflation, and, very unfortunately, food security. The mission for the third review of the program is scheduled to take place after the Spring Meetings, and it will provide a full assessment of the adverse impact of the drought on growth and emerging financing needs. Our staff and our team will also discuss policy options to mitigate the impact of the drought on the most vulnerable.
The recent announcement of an agreement in principle with Eurobond holders, is a critical milestone in Zambia's debt restructuring process. Under the G-20 common framework, the authorities will now need to finalize bilateral agreements with official creditors and reach an agreement with other commercial lenders. It's important that these agreements are in line with program parameters and comparability of treatment, as defined by official creditors.
And with that, we will wrap it up. Thank you so much for coming today. This briefing is embargoed until 11:00 a.m. The transcript will be made available on imf.org. In case of any clarifications or additional queries, please reach out to media@imf.org. I know we have a few countries where we promised a follow up and we will certainly do that, and thank you all very much again for coming. I look forward to seeing you all at the Spring Meetings and wishing you all a really wonderful day.
SOURCE International Monetary Fund (IMF)
