L-I: RV: [stop-imf] Kohler news conference

Julio Fernández Baraibar julfb at SPAMsinectis.com.ar
Mon May 29 22:50:29 MDT 2000


>From the same source and for the same reasonsm I resend the follow article.


> IMF Managing Director Kohler reveals that: 1) he's had lots of meetings;
> 2) he's a convert to the importance of dialogue; 3) he's not budging on
> the importance of economic reform (read structural adjustment); 4) he's
> establishing an internal committee to review the role of the IMF; and 5)
> he's hopeful that protests in Argentina against the IMF can be controlled.
>
> On Argentina, he offered the following:
>
> MR. KOHLER: First, I would like to answer that I was quite impressed that
> the President of Argentina strongly told me that it is his government's
> program and not an imposition of the IMF. So I took note of that and of
> course I was pleased with that because it is my own understanding. And I
> will look how it is implemented, that whatever we do, from here, from the
> IMF, the ownership of programs and reforms is very, very important. That
> there is ownership is more important than a short-term effect of maybe a
> number, a specific number, in a program of the IMF.
> I cannot overlook that Argentina has to take very tough choices, because
> indeed, you cannot spend a dollar or a peso or a deutsche mark, at the
> same time for everything. You have to decide to spend it for investment or
> consumption, and there is a need in these emerging countries to have a
> priority for investment. But when I met with the trade unions, I had the
> feeling that this basic principle is understood, or that there is a chance
> that it can be explained and at the end will be understood. And therefore,
> I am not pessimistic that these tough choices at the end will be taking
> the right direction and will pay off for the people, because the people
> will see if we spend more for investment, we cannot spend more for
> consumption.

All this is, of course, bullshit.
Argentina has been converted in a country without internal market. When this
gentleman speaks about investment, he means financial capital. Our economic
future is very black, indeed.

Julio FB
>
> The full text follows below. The whole thing is posted at:
> <http://www.imf.org/external/np/tr/2000/tr000525.htm>
>
> Robert Weissman
> Essential Information |   Internet: rob at essential.org
>
>
> Press Briefing
> by
> IMF Managing Director Horst Khler
> Thursday, May 25, 2000
> Washington, D.C.
>
>
> Mr. Khler and Mr. Dawson
> THOMAS DAWSON, DIRECTOR OF IMF EXTERNAL RELATIONS DEPARTMENT: With us this
> morning is the Managing Director of the IMF, Mr. Horst Khler. As is our
> normal practice, we will embargo the press conference until 15 minutes
> after conclusion. Mr. Khler will have some introductory comments and
> reflections, and then we will take questions. Thank you.
> MR. KHLER: Good morning, ladies and gentlemen. I thought I should meet
> with you, not in a very prepared manner or with a statement, but really
> reporting a bit out from the workshop of the IMF. The IMF has a lot of
> construction sites, and I am meeting you within this process. So for three
> weeks now I have been in the Fund. I am very impressed with--or more
> impressed than ever with the quality and commitment of staff, my
> management colleagues, and the board.
> Yesterday we had a full day's discussion about the work program of the
> IMF, and I think this will also be published if it's finalized. We agreed
> in the board that we will organize our work for the next weeks and month,
> in what I call a double track process. And one track is that we will work
> on the homework which was given to us at the spring meetings. And you know
> all these items: there is the review of facilities, standards and codes,
> transparency, the HIPC Initiative.
> On the other hand, I want also to put these work items into a broader
> picture -- what I call a vision about the future of the Fund. And for this
> purpose, this second track, we have organized a special working group
> which is concentrating on that.
> My personal priority in these first weeks is, as you know, listening and
> getting input, because I have not come here telling people I know
> everything and everything better. I have some ideas, I have my ideas, but
> I do think it is very important, in order to get a better understanding
> for the reform discussion, and not to miss important things, to listen
> very carefully, to have talks, and build up a dialogue.
> And the first element of this listening, building up input process, is
> that I talk very intensively with staff. I have been meeting individually
> with every executive director of our member states. And as you know, I
> came back from a tour to Latin America just last week, where I met with
> the leaders and economic teams of Mexico, Brazil, Argentina, and Honduras.
> I also took the opportunity there to meet with the private sector business
> people. I had, for instance, a lunch meeting in Honduras with
> representatives of all parts of society-- farmers, women, NGOs, and so on.
> So that is the listening to Latin America.
> I will, next week on Tuesday, start my tour in Asia. In Asia I will meet
> with leaders and people from the financial sector of Thailand, Korea,
> Indonesia, India, and China. And coming back from this tour I will have a
> meeting in New York with--and that is the second element of my listening
> tour and taking input--I will meet with representatives of private capital
> markets.
> And we will, hopefully, timely enough before the Annual Meetings in
> Prague, organize here in the Fund a meeting, as part of an already ongoing
> discussion, with representatives of civil society in order to show that we
> are prepared to have a dialogue with civil society and the NGOs. These are
> my personal priorities in these first weeks.
> Now then I would like to give you a short report on what I have heard,
> what impressed me, in Latin America. First, it impressed me most how
> clearly and how dedicated the leaders, presidents, the ministers of
> finance, central bank governors, and also business people--and I include
> in this even the trade unions, whom I met in Argentina--are committed to
> continue on a process of being democratic, and to organize their economies
> on a market-oriented basis. I was really impressed how clearly this came
> out of these talks, how far these major countries in Latin America have
> gone toward democracy and the market economy.
> I was even impressed by the leaders, that they mentioned and made me
> aware, for instance, of the dialogue with the civil society. They
> encouraged me to build up this dialogue, but they also told me that they
> have some concern that this dialogue should not undermine the legitimacy
> of democratically elected and established institutions. So one very good
> result of this, at least what impressed me, is the clear firmness of these
> leaders to stick to democracy and market-oriented economic policies.
> Secondly, based on that, I was also very much impressed with how prepared
> they are to continue with a clear agenda for reform policies. The sequence
> was Brazil, Argentina - then I met shortly with the Central Bank governor
> of Chile in Santiago, Chile - and then Honduras and Mexico. This was the
> sequence of the visits. All of them told me they will stay on track with
> their economic policies which they have been pursuing the last years.
> And as you know, this has already paid off for Mexico, which has very
> strong growth performance. It seems clearly to be paying off for Brazil,
> which shows that the recovery is gaining strength. It also demonstrates
> success in Argentina, but the Argentina economy is not recovering so
> strongly. Honduras, as you know, was very much damaged by Hurricane Mitch.
> There is, I think, a good chance that in this very poor, very small
> country, there is a spirit, a new spirit--that they have detected that the
> community, say, the self-effort of the country, of the people, is the most
> important thing to get out of the mess. So they stay on track.
> I discussed very carefully the situation in Argentina. As you know, there
> have been demonstrations, particularly in the north. I had a very good
> talk, a very serious talk with the trade unions, the leaders of the trade
> unions. And of course, the main focus in the discussion with the trade
> unions was the social problems, the social tensions in Argentina. And I
> made clear that the market economy needs to be based also on social
> consent--on a consensus about the social dimension of development. There
> cannot be blindness to poverty and social problems. And that was also the
> understanding of the president and the government. So I hope that despite
> the difficulties and the sacrifices, there will be an ongoing process to
> stay on track, particularly also in Argentina.
> What was also important, and that is the next element of this listening
> tour, is that these countries didn't ask so much for particular favors
> from the IMF. They said, "We do our job, and based on that, we want to get
> the support of the international community." So that was a very strong
> point. They rely on themselves.
> But what came out of this is that they complained strongly about an
> understanding or a possible understanding in the developed countries, that
> reform and structural change is a kind of one-way route, that only the
> emerging countries have to do reforms or have to change. I agreed with
> them that in order to make growth in the world economies stronger and
> steadier, there has to be a strong reform process and structural change,
> particularly also in the developed or industrial countries, the mature or
> rich countries. For instance, the euro, the weak euro was a point of
> concern, in Argentina particularly, but also in Brazil and in Mexico. And
> the request to open markets more rapidly for these countries was a
> constant, permanent, repeated demand of these leaders.
> And I do think that in the dialogue in fora like the IMF and other fora,
> there is an understanding that to gain stronger and steadier world
> economic growth means that structural change and reform policy are not
> just in the emerging countries or the transition countries, but that there
> be a parallel process in the developed countries. This has to get more
> attention in the political debate in order to fight poverty and to reduce
> the frequency and the severity of crisis.
> Thank you very much.
> MR. DAWSON: Now, we'll take questions. Please identify yourself and your
> organization. Thank you.
> QUESTIONER: You mentioned that you heard concerns about the weak euro.
> What kind of structural changes are needed in order to rescue the euro?
> MR. KHLER: Well, this has first to be defined country by country in
> Europe, but the main direction is quite clear. There is a need
> particularly for the big countries in Europe to reform their social
> security systems, their tax systems, and particularly also their labor
> markets, which must have more flexibility. This is the core direction of
> reform needs in Europe. And of course, I have just reported that in the
> Latin American countries I visited, in the big countries, there was a
> question about the sustainability of the agricultural policy in the EU.
> QUESTIONER: I'm sorry. Those kind of changes obviously would take a long
> time. Is there something you really think needs to be done sooner in order
> to help out with the euro?
> MR. KHLER: Reforms take time, and often I do think we should have this
> also in mind when we are going to give advice to transition countries or
> to emerging countries. But this is not in contradiction to short-term
> effects of the policy. This means that if the direction is clear, if the
> commitment is clearly demonstrated, I do think that will also have a
> short-term impact on the euro.
> QUESTION: I understand your concern about the social explosions and
> manifestations that were in Argentina. My question is how can Argentina,
> at the same time that it adjusts and reduces the deficit - which are
> needed to comply with the IMF - face those broad social problems?
> Apparently there is not enough room to pay that, and at the same time to
> pay what they call the social debt.
> MR. KHLER: First, I would like to answer that I was quite impressed that
> the President of Argentina strongly told me that it is his government's
> program and not an imposition of the IMF. So I took note of that and of
> course I was pleased with that because it is my own understanding. And I
> will look how it is implemented, that whatever we do, from here, from the
> IMF, the ownership of programs and reforms is very, very important. That
> there is ownership is more important than a short-term effect of maybe a
> number, a specific number, in a program of the IMF.
> I cannot overlook that Argentina has to take very tough choices, because
> indeed, you cannot spend a dollar or a peso or a deutsche mark, at the
> same time for everything. You have to decide to spend it for investment or
> consumption, and there is a need in these emerging countries to have a
> priority for investment. But when I met with the trade unions, I had the
> feeling that this basic principle is understood, or that there is a chance
> that it can be explained and at the end will be understood. And therefore,
> I am not pessimistic that these tough choices at the end will be taking
> the right direction and will pay off for the people, because the people
> will see if we spend more for investment, we cannot spend more for
> consumption.
> The debt issue is a difficult thing, particularly for the poorest
> countries, and therefore, the international community has to tackle this
> issue. There is the issue of the HIPC Initiative, which I too think is
> right, which has to be made a success.
> The most important way to deal with debt with regard to countries like
> Argentina, which is not one of the poorest--it's an emerging country--is
> to strengthen growth. On this basis the country should be able to find a
> solution for its debt.
> QUESTIONER: You gave a fairly comprehensive agenda of who you were going
> to talk to. You didn't mention anyone in the US Congress. Are you planning
> to go up to Capitol Hill to present yourself, and to go into the lions
> den?
> MR. KHLER: Well, of course, but before I come to the US Congress, I should
> tell you that I met with members of the congress, for instance, in
> Honduras, at this already-mentioned luncheon. And we had a very
> interesting discussion. As you know, Honduras is a HIPC country. They are
> in the process of getting to the so-called decision point, and in order to
> get to the decision point, in order to get the debt relief, they have to
> take prior actions. And one of the items the IMF had suggested in order to
> take prior actions, is reform of the social security system. A second
> thing is to approve a framework law for the energy sector, particularly
> for the electricity sector. The reform of the social security is well
> under way, but the law for the energy and electricity sector is a bit
> stalled because--and that is the point--the people from congress told me
> time is too short to understand the full impact of this law. And I said
> that certainly the IMF will not press for approval by congress in two
> weeks times. It is too important that congress, which is the most
> important institution in a democracy, have the full understanding of what
> the law means, what it requests, what the impact of the law will be.
> And therefore we agreed--or I agreed on a personal basis, because the HIPC
> Initiative it not something which is just decided by the IMF. As you know,
> it's a common effort of the World Bank, the IMF, of bilateral donors. I
> said on a personal basis I would agree that the IMF is not requesting that
> this law be decided now by congress in two weeks time. We are flexible in
> process, but we are firm in substance, so that the issue of, for instance,
> raising tariffs, electricity tariffs, in the medium term is not forgotten.
> And based on that, I do think that we will get a good conclusion in
> Honduras.
> Now to the US Congress, but you will have realized that it was important
> for me to elaborate first on the congress of a small and poor country
> before I come to the congress of a big and rich country. But, of course, I
> do think I will take up a dialogue with the US Congress. And I am in the
> process of organizing appointments, and I am quite confident that it will
> be a very constructive dialogue.
> QUESTION: You, no doubt, have heard of the Meltzer Commission report on
> reforming the IMF. Professor Meltzer testified before the Senate Foreign
> Relations Committee the day before yesterday, and one of the senators
> asked him whether the IMF had formally responded to the Commission's
> report, and he said, "No." So my first question is: will the IMF formally
> respond to the Meltzer Commission report? And my second question is: do
> you have any intention to meet with Professor Meltzer or other members of
> the commission as part of your listening process?
> MR. KHLER: That is absolutely clear, I will meet with Professor Meltzer. I
> have already told him so in a letter when I answered him, because he
> congratulated me on my appointment as Managing Director. So this is in
> process.
> But as far as I know, the Acting Managing Director, Stan Fischer, has
> testified to the Congress Committee in the debate about the Meltzer
> report.
> MR. DAWSON: And I might add, Mr. Fischer has appeared with Professor
> Meltzer as recently as last week, and the actual formality of the
> commission is that the US Treasury, to whom it was in part directed, is
> preparing a response. So this is a process that's going on.
> QUESTION: Going back to the question of Argentina, you mentioned that
> growth is the answer to this problem of debt. The problem in Argentina in
> terms of the debt is that you have basically $10 billion in interest
> service--on service every year. And you have the problem of growth and
> trying to answer to the social problems that my colleague mentioned. Some
> people on Wall Street told me that the IMF is partly responsible in
> Argentina, because [inaudible]. So the only way for Argentina to really
> come back to growth is to have an important restructuring of the debt.
> What is your view on this?
> MR. KHLER: I will not go into details about restructuring, rescheduling,
> or otherwise of the Argentine debt. That is Argentina and the debtors'
> issue. But I want to be clear that I do think a major point for dealing
> with this issue is to keep the confidence Argentina has built up in the
> last years with regard to private capital markets, to the international
> community. And the Fund is prepared to play a role in this ongoing
> confidence-building process. That's my answer to this, because I don't
> want to go into details. I am sure that this country has the potential to
> prove that it is a reliable partner, and also that it --even more
> importantly--has the potential and the commitment to achieve a very strong
> growth path.
> QUESTION: Mr. KHLER, you just mentioned this working group that supposedly
> is working on the vision thing. Could you elaborate on this working group?
> Who is it actually made up of? Are they only people from the Fund or
> external experts as well?
> MR. KHLER: When I came here, I discussed a bit with Tom how far I should
> go with information at this stage of the discussion, and I said, "When we
> are going to say exactly who is a member of this group and what's the
> process, then we are raising expectations, and a variety of questions."
> We are in mid-process of organizing that. The core of this group is some
> heads of departments here at the Fund. And of course, we will also try to
> get some external advice, but give us a bit more time to organize it more
> carefully.
> MR. DAWSON: And you are personally chairing it.
> MR. KHLER: Yes, I am chairing it, but it involves the full management
> team. Let me answer this way. It should be big enough to have the full
> range and expertise that are necessary, but small enough to be practical.
> QUESTION: Going back to Mexico, sir, as you know, the Mexican
> economy--well, had a really great performance in the first months of this
> year, growing at more than 7 percent. Beside that good performance, there
> are some people in Mexico that say that maybe by the end of the year the
> Mexican economy will have some sort of over-heating. I was wondering, now
> that you have been in Mexico, did you see any signal of this risk? What
> would be your assessment after your visit to Mexico?
> MR. KHLER: Well, I think that the Central Bank of Mexico was right when it
> took the decision to raise its interest rates. But I personally would also
> not like to comment on whether it is now overheated or is it just strong
> growth. It is very, very strong growth, and it seems to me it's better, --
> a bit of kidding or a joke--it's better to talk about over-heating, than
> to talk about recession.
> I think the fundamentals of the Mexican economy have improved remarkably,
> and therefore, there is the potential for steady growth. With some
> vigilance, which has been demonstrated by the decision of the Central
> Bank, it should be possible to hold up strong growth for some period of
> time in Mexico.
> MR. DAWSON: Two more questions.
> QUESTIONER: Mr. Khler, what has been the greatest surprise to you of your
> first three weeks at the IMF?
> MR. KHLER: Greatest surprise? Not a surprise, but something where I
> realized it's really clear. The menu card of the IMF is totally French.
> [Laughter.]
> MR. DAWSON: I wish that had been the last question, but I promised one
> more.
> MR. KHLER: But I like really, the--I like it really.
> [Laughter.]
> QUESTION: So when are you going to Africa, and to what countries will you
> go?
> MR. KHLER: It's in the planning, it's in the process. I would have liked
> --to be quite honest-- after Latin America to go to Africa, rather than to
> Asia, because I had been in Asia before I came to the Fund, but it takes a
> bit longer to organize the Africa trip. So I will come back, I think, from
> Asia on the 7th of June or so. And it's now in the planning that I will go
> to Africa the 10th of July for one week. And I certainly will meet
> with--it's my idea and it's not yet totally decided--to go to South Africa
> and Nigeria. I am in the process of seeing which francophone country I
> should visit, the francophone countries in Africa for this meeting. So I
> will go to four or five countries, but please, it is not yet decided. And
> you should also know why. I mean, it's difficult for the moment --a lot of
> crises and even war. I want to have the best effect for this trip.
> MR. DAWSON: Thank you very much. The embargo will be lifted at 20 minutes
> after 10:00. Thank you.
> [End of press briefing.]
> IMF EXTERNAL RELATIONS DEPARTMENT
> Telephone: 202-623-7300  Fax: 202-623-6278
>
>
>
>
>
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