Transcript of IMF Press Briefing

June 8, 2023

MS. KOZACK: Good morning, and welcome to this press briefing, both the those who are here in-person and those joining us online. I’m Julie Kozack, Director of Communications at the IMF. This briefing is embargoed until 11:00 a.m. Eastern time, and I’m going to start as usual with some announcements, and we have quite a few announcements. So, I appreciate your patience as I plow through them. First, I’m going to talk about management travel.

So, from June 6th until tomorrow, June 9th, the Managing Director is in Astana, Kazakhstan, as part of her visit to Central Asia. She has already visited Uzbekistan. In Astana, the MD has had already bilateral meetings with the authorities, and she’s participated in the Astana International Forums Plenary Session. And she has had an event for Kazakh students and delivered a keynote speech on growth, inclusion, and the green transition at one of the universities.

Tomorrow, the MD will head to Almaty, also in Kazakhstan for the opening ceremony of the IMF’s Technical Assistance Center located there. From June 13th to 15th, the IMF will hold the global conference on the G-20 Data Gaps Initiative organized by the IMF in collaboration with the Interagency Group on Economic and Financial Statistics, and the Financial Stability Board Secretariat. IMF Managing Director Kristalina Georgieva will deliver opening remarks on June 13th for the panel discussion on climate change.

Deputy Managing Director Bo Li will deliver introductory remarks on June 14th for another panel discussion at that event. On June 15th, the managing director will be in Luxembourg for the Euro Area Article IV concluding meeting, and the next day she will be in Brussels for bilateral meetings. From June 17th through 21st, the managing director will visit Morocco in the run-up to our 2023 Annual Meetings.

Her visit will include meetings with the authorities and a high-level policy roundtable on Central Bank digital currencies. Those will be in Rabat. Other engagements in Marrakesh, Morocco will include a site visit for the Annual Meetings and meetings with students at a university.

June 22nd to 23rd, the managing director and deputy managing director, Bo Li will attend the Summit for a New Global Financing Pact in Paris, organized by French President Emmanuel Macron. The two-day summit will include a debate at the highest level in hybrid formats between heads of state and government, leaders of international organizations, and representatives of civil society foundations, funds, and the private sector.

On June 26th, our first deputy managing director, Gita Gopinath, will be in Central Portugal, where she will deliver a speech as part of the ECB forum on central banking. From June 8th to 11th — so, starting today, our deputy managing director, Antoinette Sayeh, is in Egypt where she’s meeting with the authorities and will participate in a high-level panel discussion on the release of a paper on strengthening fiscal risk management in the Middle East and North Africa.

I would also like to let you know that our WEO update, World Economic Outlook update, will be released on Tuesday, July 25th, and a press conference will be held here in our IMF headquarters in Washington. And as you already know, and always a reminder, the 2023 Annual Meetings will be held from October 9th through 15th in Marrakesh, Morocco. The full schedule of events will become available closer to the event, and registration for the annual meetings will open on June 16th.

So, with those announcements, let us now get to your questions. Please remember to identify yourselves and the media outlet that you represent. Thank you so much. Okay. Over to you guys. Okay, let’s start with Paula.

QUESTIONER: Good morning, Julie. I would like to know how the negotiations with Argentina are going on. And can you tell me if there is any timeline or tentative closing date? Because the government has to pay back about more than 2,000 millions in about two weeks. Is that a fixed deadline or it can be postponed? Thank you.

MS. KOZACK: Okay. Let’s take a few questions on Argentina. I know there’re often several. Rafael?

QUESTIONER: Yeah, thanks Julia. Rafael Matthus. As a follow up to Paula’s question, I was hoping, I mean, I know you’re going to give us an update on the negotiations, but I was hoping you can tell us a little bit about what’s the reason for the holdup. Negotiations have been stretching for almost two months now, and according to the original timeline in the EFF of Argentina, the fifth review was supposed to close next week on June 10th actually, this week.

And then also if there are any planned in-person meetings here in D.C. Thanks.

MS. KOZACK: Okay. Any other questions on Argentina? We’ll take a few. Andrea?

QUESTIONER: Just wanted to add to that. So, yesterday, the CLAAF, the Organization of Latin American Economists called for the IMF to create an emerging markets fund and specifically referenced Argentina. Have you had a chance to look at that or has management had a chance to look at that and kind of get, you know, some feedback on that? And one of the stipulations that they’re saying is that the IMF in cases like Argentina, where a country has repeatedly failed to meet its targets, shouldn’t necessarily enter into a new program. But it should stop putting these waivers out, basically, just instead of agreeing to a bad program. Thanks.

MS. KOZACK: Thanks. And I think I see Liliana?

QUESTIONER: Good morning, Julie. My question is related also to Argentina concerning with the offer investor the chance to swap their holdings on local debt for a new (inaudible). How do IMF evaluate this proposal and what are the expectations about this local swap? Thank you.

MS. KOZACK: Okay. Very good. Let me go with those questions. I’m kind of losing the screen. So, let me start with those questions on Argentina. Okay. So, I want to first start out by saying that the teams have been working very hard together. The situation in Argentina is, of course, very complex. The economic situation is very difficult and very much exacerbated by a historic drought. So, that is the broad context.

Also, just to note that on March 25 ^th (March 31^st), the IMF’s Executive Board completed the fourth review of the EFF Program, allowing a disbursement at that time of 5.4 billion U.S. dollars. Our team has been working very closely with the Argentine authorities in the context of the Fund supported program to address the very challenging and complex economic situation.

The focus of the discussions of the fifth review has been on alternatives to strengthen the authorities’ program, while also recognizing the impact of the drought on the economy. This includes discussions on policies to safeguard stability, enhance fiscal sustainability, and strengthen reserves in the country. Each of these are essential to reduce inflation and ultimately protect the most vulnerable members of society who are often those most affected in these challenging economic times.

The teams are continuing to work constructively, discussions are frequent, and they are aimed at advancing the program. And we will communicate more when we have greater details. Those discussions, in a nutshell, are ongoing and I certainly don’t want to preempt them. But we will communicate more to you once we have more details.

On the issue of the debt exchange, what I can say is that we certainly welcome the authorities’ efforts to reduce rollover risks associated with domestic debt. And while also ensuring that these operations are conducted in a manner that protects debt sustainability and do not add to vulnerabilities down the road. And these efforts are part of our ongoing discussions with the authorities.

Andrea, on your question on the CLAAF proposal, this, of course, is a new proposal, and we’re, of course, looking into it. What I would say in general is when we think about the situation of the last few years and the difficult situation that the global economy has been in, the IMF has responded in a way that has been, I think, quite agile.

We have approved $300 billion of financing for our member countries, and we have taken an approach that has involved a number of different steps, starting during the pandemic with the provision of significant emergency financing, quick dispersing financing for member countries in the depth of the pandemic. We then had, of course, the SDR allocation in August of 2021, which provided a significant global liquidity. We created a new instrument, the Resilience and Sustainability Trust, and are strongly encouraging members to channel SDRs into the RST.

We also created a food shock window to help member countries dealing with the food crisis that followed Russia’s invasion of Ukraine. And we have also adopted some of our financing assurances policies to allow for more for more nimbleness. So, I believe that we have, I would say it’s fair to say, we’ve adapted and had an agile response to the crises of the last few years. And we are committed to continuing with an agile and adaptive response to support our members.

I see, sorry, I see one more question on Argentina. So, let me just take that one and then we can move on. Patricia?

QUESTIONER: Hi, Julie. How are you? I was wondering, well, in terms of what my colleagues had asked before, are you expecting the visit of Argentinian government officials next week to start wrapping up this revision? And also if the Fund agrees to allowing part of the future disbursements to be used in to intervene in the FX market, if necessary?

MS. KOZACK: Thanks very much, Patricia. As I already noted, I don’t want to preempt the discussions that are already taking place, but I will say that as with previous program reviews, we would expect in-person meetings to take place at some point. And that those, of course, could take place here in Washington. We will come back to you once we have more information on the status of discussions. Okay. Let’s go Shabtai. Oh, Sorry.

QUESTIONER: Go here?

MS. KOZACK: You want to go at the end? Yes. Here, I’m sorry.

QUESTIONER: Hi. That’s all right. I’m Daniel Avis. I just have one —

MS. KOZACK: I’m sorry.

QUESTIONER: No, no, no, that’s okay. No problem at all. Just a couple of brief questions. The upcoming meetings in Paris, I’m just wondering if you could lay out perhaps what some of the managing director’s priorities might be there. And just a brief one on her relationship with the new World Bank president.

MS. KOZACK: Mm-hmm.

QUESTIONER: Just wonder how that’s going and if there’s any early priorities that might have come up in their discussions. Thank you.

MS. KOZACK: Okay, great. So, the managing director will be attending the meetings in Paris. She’s very much looking forward to, to attending that that Summit. The priorities I think are very clear for us. In a world of extreme challenges, in a world where we are concerned about risks of global fragmentation bringing, coming together at for a — such as our own Spring and Annual Meetings, but also events in Paris. It’s important for the global community to come together to find ways to enhance cooperation.

And we see a few key areas where that cooperation can continue. And it’s vital. These include tackling the climate crisis, helping to resolve debt issues for our most vulnerable members. And, of course, ensuring that global trade continues to be a support for prosperity in the global economy.

In terms of the new World Bank President, certainly, as the managing director has already said, we give him a warm welcome and we look forward to working with him. He and the managing director have met and they have agreed, of course, to continue the strong collaboration that the IMF and the World Bank have together. This collaboration is essential to tackle the challenges that the global economy faces today, including the ones I just mentioned, climate, debt and helping our most vulnerable countries through these difficult times. Thank you. Let’s go right here.

QUESTIONER: Thank you, Julie. So, I have two questions on Ukraine. The first one is about the review of the EFF Program. Could you elaborate please, when the IMF Executive Board plans to meet to approve the results of this review? And the second question, regards the damn destruction and hear of last of Ukraine, could you please pre-assess how significant this impact would be on Ukraine’s economics in the near future and the long perspective?

MS. KOZACK: Okay. Very good. So, let’s just step back a minute on Ukraine and I’ll update you on where we are with the program. So, on May 30th, IMF staff and the Ukrainian authorities reached staff level agreement on an updated set of policies for the first review under the four-year EFF arrangement. All quantitative performance criteria for end April and structural benchmarks through end May were met. And this paves the way for the Executive Board’s consideration, which is tentatively scheduled for the end of June. And this would enable a disbursement of about 900 million U.S. dollars. The Ukrainian economy is continuing to show remarkable resilience and recent developments before the latest tragedy point to a gradual recovery in 2023.

Now, turning to the impact of the destruction of the dam, we are, of course, very concerned by the social, economic, and environmental impact of the destruction of the dam. It is, of course, a human tragedy, which is extremely regrettable and unfortunate, and our condolences go to those who have been affected by this tragedy.

It is, unfortunately, too early to assess the damage on the economy. We’re, of course, following the situation closely. Our team is in very close and frequent contact with the authorities, and in due course, we will provide a full assessment. Okay, let’s go here in the back.

QUESTIONER: Yuka Hayashi with the Wall Street Journal. The World Bank, this week, put out their Semi-annual Economic Report, and they expressed pretty pessimistic view for the second half of the year warning about a sharp slowdown citing mainly, I guess, the impact of monetary tightening around the world. Earlier this year or maybe late last year, there was a pretty significant disparity between the views of the IMF and World Bank. And you mentioned that the WEO is coming out in late July, but I’m wondering if you could discuss the IMF’s view for the economy for the rest of the year at this point. Thank you.

MS. KOZACK: Okay. Thank you very much. So, we will, as I said, have an updated assessment in WEO update in late July. In April, our assessment was that the global economy would slow this year, including because of monetary tightening already in the pipeline. And importantly, as we looked beyond this year, our assessment for the medium-term was one of relatively weak medium-term growth, around 3 percent over the next five years, which is our weakest medium-term growth forecast since 1990.

So, our overall assessment of the global economy is one that is slowing and in particular, we see challenges over the medium-term for the global economy. And that requires policy measures to be taken now. The key priorities are in the very near term, of course, the fight against inflation. We see that through monetary tightening, and we believe central banks should stay the course on monetary tightening to decisively reduce inflation.

We also see a need for fiscal policy to support the fight against inflation while protecting the most vulnerable. And of course, for the medium-term, we see opportunities for countries to take transformative reforms to boost medium-term growth and to ensure that we are not stuck in a low growth medium-term environment. Yes, in the back.

QUESTIONER: Thank you. Paula Escalada, EFE. I would like if you could give us a comment on, on the outlook of the Euro Zone, because today was confirmed, the technical recession and you always avoid the word recession, but it has been confirmed. And also if you could give us an update about Spain. Thank you.

MR. KOZACK: Sure. Thank you. So, on the Euro Zone we will be concluding the Article IV mission next week and at that time, we will, of course, publish a concluding statement, and later on we will publish the Article IV staff report after the Board meets. So, at that time the staff will provide its full assessment of the Euro Zone economy. So — and I won’t preempt that now.

With respect to Spain, what we have seen in Spain is that growth has been quite resilient in the first quarter. It was stronger than certainly we had expected. And we will, of course, reassess Spain’s outlook taking into account this stronger than expected first quarter data when we provide the WEO update later in July. Yes, right here.

QUESTIONER: Hello. Thank you so much. So, couple of questions. Yeah. The first one is regarding United Nations Secretary General António Guterres’ proposal. He introduced to the General Assembly on Monday, his proposal regarding “strengthening the voice of and representation of developing countries in the Boards of the World Bank and the IMF reforms to IMF quarters, which should be linked from access to resources.” The question is, has the IMF already studied these proposals and what is the Executive Board’s perspective on such an initiative? Thank you.

QUESTIONER: Thank you very much. So, of course, we’re looking at the Secretary General’s proposal, but I’m not in a position now to comment on any of the specifics. As you may know, the IMF is in the process of conducting the 16th General Review of Quotas. The successful completion of the 16th General Review of Quotas by December 15, 2023, is a priority. And discussions, of course, are ongoing in-line with guidance from our membership.

To be more specific, the membership has asked the IMF to do the following. To revisit the adequacy of quotas and continue the process of IMF governance reform, including a new formula as a guide, and to ensure the primary role of quotas in IMF resources. I’ll stop there.

QUESTIONER: And the second question, it’s follow-up to Ukraine. So, Daniel (inaudible), who is the chairperson of the Verkhovna Rada of Ukraine Committee on Finance, Taxation and Customs Policy declared in June that Kiev “struggles to execute IMF’s structural beacons and benchmarks as the political process in Ukraine has fully restored.” So, do you see any objections, any risks that the Ukraine would struggle to meet its structural benchmarks, and this could lead to possible suspension of any further trenches? Thank you.

MS. KOZACK: Thanks. So, so as I said, we’ve just reached a staff level agreement with the Ukrainian authorities on completion of the first review. And in that agreement, all structural benchmarks and quantitative performance criteria have been met. Thank you. Let me go onto WebEx. I see Eric Martin. Eric?

QUESTIONER:Yes. Thank you so much, Julie. I wanted to ask about a couple of things. One of which is the proposal that has been floated around the Paris Summit for a couple of weeks from now. One of the aspects of which is the suspension of IMF surcharges. Wanted to find out if that is something that’s getting additional consideration at the IMF. I know it’s something that was reviewed in the past and was considered to not be something doable. I was curious to hear whether there’s new discussion or consideration of that. And also, if you could give us an update on the Global Sovereign Debt Roundtable.

And, you know, understanding that there are technical discussions or working group discussions to be taking place soon and what progress has been made there or what do you expect to be the focus or the deliverables coming out of these technical discussions. Thank you. And also whether the technical discussions, if it’s possible to say if they’re taking place virtually or taking place in-person somewhere. We had heard the possibility of China hosting. Thank you.

MS. KOZACK: Okay, thank you, Eric. Okay, let me start with surcharges. Just to give you the latest. On December 12, 2022, the IMF’s executive board completed its regular review of the IMF’s precautionary balances which is a key element of the IMF’s framework to mitigate financial risks. As part of this review, the board also discussed the role of surcharges including the merit of potential changes to the policy. Surcharges were also raised by several executive directors in the executive board discussion of the Fund’s income in April 2023. Overall, views on changes to the surcharge policy continued to diverge including on the merits of temporary relief of surcharges. The dialogue on surcharges is expected to continue with the aim of achieving a greater convergence of views. A broad consensus among the IMF’s membership is needed to make changes to the surcharge policy which would require approval by 70 percent majority of voting power in the executive board. And then turning, Eric, to your question on debt. Okay, so let me give you a little bit the timetable on the GSDR. So, of course the GSDR as you know was launched with the World Bank and India as G20 president and of course ourselves, the IMF, in February, and it aims to bring together key stakeholders to address current shortcomings in the debt restructuring process. The April 12th meeting of the GSDR resulted in tangible progress on debt restructuring in a few areas including information sharing, MDB provision of net positive flows of concessional finance, and further work on comparability of treatment. Now, going forward there are a few next steps. So, first, on June 15th there is a workshop on comparability of treatment scheduled and it will be co-hosted by the G20 India presidency, France as chair of the Paris Club, the IFF, IIF, and possibly China. Then, on June 30th there will be a deputy’s meeting and we expect that these deputy’s meetings will become regular and to take place every few months and we’re also putting in place a technical group to discuss some issues in depth with the first meeting scheduled on June 9th of this technical group, which is tomorrow. The next meeting of principals would be expected to take place at the annual meetings of the IMF and World Bank in Marrakesh in October. And it’s also important to remind that the work of the GSDR is about processes and procedures, not individual country cases. Therefore, some of the discussions are highly technical, they may take time, but we do expect to see continued tangible progress with the view of having a meaningful impact on accelerating the debt restructuring process. Let’s see. Let’s continue on Webex for a moment. We have Adam. Adam, did you want to come in?

QUESTIONER: Yes, thank you for taking my question. Actually, I have two questions. My first question is about the SLA agreement that has been signed with Lebanon a year, around a year and two months passed since the signing of the SLA agreement. My question is, after the financial and the monetary adjustments that happened throughout this year is the SLA agreement still valid according to IMF standards? My second question is about the director of the Middle East and Central Asia at the IMF. Several parliamentary blocks in Lebanon have supported his candidacy for the presidential elections and media reports have suggested that he has been campaigning for this post, so my question is related about the IMF Code of Conduct for staff at the IMF that forbids any staff from conducting any political activity so has the IMF board been notified by this pursuit by Mr. Azour and can you confirm if whether he’s an official candidate or not?

MS. KOZACK: Okay, thank you very much. So, on Lebanon, on June 1st, our executive board concluded the article for consultation with Lebanon. The economic outlook for Lebanon is highly uncertain and it very much depends on policy actions that can be taken by the authorities. Lebanon needs urgent action to implement a comprehensive economic reform program to arrest the severe and deepening crisis and to allow Lebanon’s economy to recover. Delays in implementing key reforms are keeping the economy severely depressed and we are concerned about irreversible consequences for the economy especially for the poor citizens of Lebanon and the middle class. From the IMF, we remain engaged and of course we’re willing to support Lebanon. Lebanon will need strong financial support from the broader international community and the financial needs of Lebanon over the next several years are very large given the magnitude of the economic crisis. With respect to your specific question on the program, it’s important that the government secure broad political support to implement the economic reforms that were agreed with fund staff in April of 2022. Timely implementation of these reforms is critical to end the current crisis and prevent a further deterioration in living standards of the people of Lebanon. With respect to your second question on Mr. Azour, in order to avoid any perception of conflict of interest, Jihad Azour, Director of the Middle East and Central Asia department has temporarily relinquished his responsibilities at the IMF and he is on leave from the IMF. Let me take another question maybe on Webex if we have one. I’m having trouble seeing the, okay, okay, let’s go back to Andrea, then.

QUESTIONER: Thanks so much. I’ve got a couple that I wanted to just run through. On the, you know, I know we’ve talked about the global sovereign debt roundtable, but there are a couple of specific cases that are in train. There are reports that Zambia’s government has proposed ring-fencing some Chinese debt that funded a hydropower project. Would that fit with the IMF debt sustainability analysis and the comparability of treatment from principle, and also what is stopping, you know, what’s in the way of the official creditor signing an MOU. Are you confident that this could be signed this month? Do you want me to just run through them?

MS. KOZACK: Sure.

QUESTIONER: Okay. On Ethiopia, the U.S. has suspended food aid over allegations it is being allocated to the military. Is that something that could hold up the financing assurances in the IMF program? And then on Ukraine, I realize you say it’s too early to assess the damages. We already have some pretty good indication of the extent of the damage and the displacement of the people, the damage to the environment, and also implications there’s been a bombing of a pipeline as well that carried ammonia for supply chain, production of fertilizer. Are you concerned that the, you know, this latest turn of developments in Ukraine could revive the concerns about global food and supply chains that we saw at the beginning of the war and into the first year or so of the war? You know, how much of an impact will this situation in Ukraine have globally on food supply?

MS. KOZACK: Very good, thank you. Okay, so starting with Zambia. Let me step back and just give you the update of where we are. August 31st of 2022 the IMF executive board approved 1.3 billion dollar ECF arrangement for Zambia to help advance the authority’s homegrown economic reform plan. On April 6, 2023, a staff level agreement was reached on completing the first review. Zambia has met all structural benchmarks and all quantitative performance criteria for the first review. The main hurdle for completion of the first review and the program to be presented to our executive board is the need for the authorities to reach agreement with its official creditor committee on a debt treatment that is in line with program parameters and financing assurances that were provided in July 2022. The official creditor committee for Zambia met on May 25th and as we speak, another meeting is taking place, and in that meeting of the official creditor committee, they are discussing proposals for specific debt treatment for Zambia. We are encouraged by the constructive nature of these discussions, and we hope an agreement will be reached very soon on a debt treatment. This would allow our executive board to quickly consider Zambia’s request to complete the first review of the ECF. All right, let me turn now to the next one which is Ethiopia. Okay. Turning to Ethiopia, Ethiopia has been subject to multiple shocks, multiple economic shocks, including six consecutive years of drought, a pandemic, domestic conflict, and the impact of Russia’s war in Ukraine. The economic challenges are significant for Ethiopia and they include food insecurity, humanitarian needs, post-conflict reconstruction, high inflation, shortages of foreign exchange, and assorted shortages of some imported goods. We have received a request for financial assistance to help Ethiopia address these challenges, discussions are ongoing on economic policies and reforms that could potentially be supported under an IMF program. The IMF program would aim to support the authority’s home-grown economic reform agenda, help address key macroeconomic vulnerabilities, and help unlock Ethiopia’s considerable economic potential. The new program would require a clear commitment from development partners and financing assurances from creditors under the G20’s common framework to ensure that it can meet objectives. And on Ukraine, the only thing I would add I think to your, or the way I would answer your question, Andrea, is to say, you know, as our managing director has indicated, you know, the best way to improve prospects for global growth and to avoid concerns about continued environmental damage and global food security, is for the war to come to an end as soon as possible.

QUESTIONER: You didn’t answer my question on the ring-fencing and comparability of treatment.

MS. KOZACK: I don’t have anything for you on that one. Okay, let’s go back to Webex. I have Matthew Lee.

QUESTIONER: Thank you. Thanks a lot. Thanks for taking the question. Thanks for the answer on Zambia. I wanted to ask about Tunisia. There’s a lot of, you know, coverage of it and the Italian Prime Minister went and visited and he said that she’s going to throw Italy’s weight behind their, I guess, application, but the Tunisian president has said that the IMF comes with a recipe for treatment without knowing the disease, so I wonder if you have any response to that quote, and also what’s the status of Tunisia and the IMF and the various European and other parties that say they are urging the IMF to be of assistance? Thank you.

MS. KOZACK: Thank you very much, Matthew. I’ll be very brief on Tunisia. The IMF remains a strong partner of Tunisia. Our engagement continues and the IMF stands ready to support Tunisia in its economic reform efforts. Let me go back to, I have time for maybe two more questions, so let me go back to Webex, to Momar Lo and then we’ll go to Shabtai.

QUESTIONER: Thank you, Julie. I have two quick questions. I’m from Senegal. The first is, I want to know how does the IMF handle the political situation in protest in Senegal? What will happen if the situation deteriorates, if the situation goes worse, worsens? And the second one is, Senegal’s debt has risen considerably in recent years reaching more than 70 percent, so to counter this phenomenon some political leaders have proposed the following solution that every Senegalese should pay the sum of 500,000 to pay off the government’s loans. Is this viable as a solution? Thanks.

MS. KOZACK: Thank you very much. With respect to your first question on political developments, we do continue, we do closely monitor the situation and we will continue to closely monitor developments. We remain committed to assisting the Senegalese people in overcoming the economic challenges posed by the current difficult economic situation. Senegal has a long history of peace and democratic practices and we encourage all stakeholders to resolve any possible political conflicts in a peaceful manner. This will be key to ensuring that Senegal reaches its full potential. On your question on debt, what I can say on debt is to reiterate the IMF’s views on Senegal’s debt sustainability. Out debt sustainability analysis for Senegal continues to show that debt is sustainable but with limited space to absorb economic shocks. The authorities are committed to a fiscal consolidation path and to enhancing debt management both of which are critical to maintaining Senegal’s debt sustainability. Let me now go to Shabtai.

QUESTIONER: Thanks. I wanted to ask about this law that’s been proposed in New York which is a sort of local law but it could have global ramifications which would force commercial creditors to the tables sort of the same way that governments are being asked to come to the table to talk about debt relieve, for sovereign debt restructions [sic] in low income countries and I was wondering if the IMF has any thoughts on this. There’s been, you know, a push to sort of force the private creditors to the table. On the other hand, there’s been arguments that this could actually end up making debt more expensive for developing countries, so I was wondering if the IMF has any thoughts on this law and what should be done.

MS. KOZACK: Okay. Thanks very much. What I’m going to do in responding to this question is try to give you the broad IMF perspective on the sovereign debt restructuring process. So, first it’s important to note that we believe that an effective and timely sovereign debt restructuring process, you know, is critical for resolving sovereign debt distress. Since the early 2000’s, the IMF has endorsed a contractual approach to sovereign debt restructuring which relies on the use of collective action clauses which we call CACS in sovereign bond contracts. Now that approach in our opinion is working well and just to give you an update, CACS have now become market practice with more than 95 percent of outstanding international sovereign bond contracts having some form of CACS. Moreover, 70 percent of these include enhanced CACS which are even more potent in binding minority dissenting creditors. And the IMF remains committed to this approach. We have been working with all stakeholders in a continuous effort to improve and strengthen this contractual approach. And as we already discussed, we are also committed to other efforts to accelerate the debt restructuring process. We talked about the efforts we’re making under the global sovereign debt roundtable and that is also aiming to provide a more timely and orderly debt restricting process for countries that are facing debt distress. On your question regarding statutory tools for IMF for sovereign debt, we’ve looked into this issue, we have a number of board papers that have been issued and I just want to point out some principles that should be, that we believe should be considered when thinking about the statutory approach. First, it is important that any legislation is carefully designed and based on consultation with relevant stakeholders. It is also important that any legislation support the timeliness and predictability of the debt restructuring process and any legislation should address the potential adverse impacts on cost and access to finance for sovereign borrowers as well as on creditor rights, and we do understand that some observers have raised questions as to whether the draft New York law is consistent with these principles. I think we are basically out of time. I will take two more questions, so I’ll go to Webex for one and then one last one in the room. So, on Webex I’m going to go to Ahmed.

QUESTIONER: Good morning.

MS. KOZACK: Good morning.

QUESTIONER: Thank you for picking my question. My name is Ahmed and I’m from Egypt. I have a question about Egypt — for the date for the International Monetary Fund mission to Egypt for the first review. And if a date has not been set yet, what are the reasons for the delay as the review was expected to take place last March? Thank you.

MS. KOZACK: Okay, thank you every much. So, on the status of the program, so in December 2022, the executive board of the IMF approved an EFF program with Egypt in the amount of 3 billion dollars. The program is aimed at supporting the authority’s efforts to preserve macroeconomic stability, restore buffers, and pave the way for inclusive private sector led growth. The IMF of course remains engaged with the Egyptian authorities to pave the way for completion of the first review of the EFF. This includes steady implementation of the divestment strategy, ensuring that policies provide for competitive neutrality for all firms to promote a level playing field. It also, discussions are also looking at slowing down the large national investment projects to reduce pressures on prices and the exchange rate and sustainable moving toward a flexible exchange rate to alleviate foreign exchange shortages. These discussions are ongoing, and we will provide more information when we have a further updated. And let me go to the last question over here in the room.

QUESTIONER: Thank you very much. I work for Jiji press, Japanese news agency. Just a quick question on (inaudible). In your last conclusion statement, you are speaking to the (inaudible) rate of a debit. 5.25 to 5.50, and given the last very strong job report, could you update your view on that point?

MS. KOZACK: Okay. Thank you very much. So, it is just to remind that on May 26, 2023, just a few weeks ago, we concluded the, well we had the IMF staff issued its concluding statement for the 2023 article for consultation. In that assessment, staff noted that the U.S. economy has been remarkable resilient despite many shocks. We’ve also seen very clear strength and resilience in the U.S. labor market which has been, of course, validated by the most recent data. We also see that inflation momentum has slowed but that inflation does remain a pressing concern. So, thinking about what all this means in terms of monetary policy, our advice remains unchanged which is that the Fed needs to stay the course on monetary policy to ensure a durable reduction in inflation and to ensure that inflation expectations, of course, remain well-anchored. If inflation does prove to be more persistent than expected, then the Fed may need to push interest rates higher for longer. And with that, I will bring this to a close. Thank you all very much. As mentioned at the outset, this briefing is embargoed until 11 a.m. Eastern time and the transcript will be made available on IMF.org. In case you need any clarifications, or you have additional queries, please do reach out to media at IMF.org. Thank you very much. Enjoy the rest of the day and good luck dealing with our very unpleasant air. Thank you.