Monday, May 23, 2016
Inner City Press Asked IMF of Protests in Suriname, IMF Today Supports Tariff Rise
By Matthew Russell Lee
WASHINGTON, May 23 -- When the International Monetary Fund held its biweekly briefing on May 19, Inner City Press asked about protests against the IMF in Suriname:
"On Suriname, there have been protests of the rise in electricity prices. What is the status of the discussed two-year US$478 million stand-by arrangement? What is the IMF's response to the protesters linking the price rises hurting the poor to policies demanded by the IMF?"
Spokesperson Gerry Rice said that the Fund does support the Surinamese authorities' moves to eliminate to subsidies, to "open space." See the IMF's transcript, below.
On May 23, the IMF explicitly came out in favor of raising the electricity tariffs:
"Mr. Daniel Leigh, head of the IMF’s staff team for Suriname, issued the following statement in Washington today:
“The government of Suriname has been taking important steps to implement its home-grown reform program in response to the difficult economic situation the country is facing. The authorities have now adopted all prior actions agreed in discussions with the IMF staff, paving the way for the IMF’s Executive Board to consider a two-year Stand-By Arrangement (SBA) with the Fund in support of Suriname’s reform program on May 27. The SBA would provide financial assistance in an amount equivalent to approximately US$478 million.
“This is a challenging program that will require great efforts from Surinamese society as a whole to stabilize the economy and set the stage for recovery. The authorities’ program includes measures to strengthen the social safety net, including through increased spending on social cash transfer programs, to moderate any negative impact of macroeconomic adjustment. It also provides tax breaks to protect taxpayers’ purchasing power and raises capital spending to create jobs and build infrastructure.
“We welcome the decision taken in recent days to raise electricity tariffs to cover 60 percent of the cost of electricity production, while structuring the tariffs so that the biggest consumers bear the largest part of the adjustment burden. The gradual elimination of electricity subsidies will make space for better targeted social spending and improve the fiscal situation.
“The authorities’ reform program, backed by the IMF, can provide a durable solution to the underlying problems facing the country, as well as a path toward sustained growth."
We'll have more on this. Here was from the IMF's May 19 transcript:
Gerry Rice: Let me take a few things online.. There is a question on Suriname there have been protests about the IMF backed electricity price increases. What is your reaction, what is the status of the program? And what I can say on Suriname is the authorities have requested our assistance to support their comprehensive program to stabilize Suriname's economy and set the stage for its recovery.
On the electricity issue on the tariffs indeed the Fund supports the governments plan to gradually eliminate electricity subsidies because that will make space for better targeted social spanning and in addition improve the fiscal situation. We expect the Board to consider the request from the Surinamese authorities in the coming weeks.
There is a question on Malawi. What is the status of the IMF's programs particularly in light of the previously discovered irregularities referred to as cash gate. So on Malawi an IMF team visited Lilongwe in March. This is in the context of the seventh and eighth reviews under an ECF, an Extended Credit Facility and on program performance Malawi has demonstrated a concerted effort to get the program back on track.
Including on domestic financing and domestic assets on the structural side reforms in the financial sector were carried out as planned and improvements in public financial management in particular bank reconciliations are gaining momentum but this needs to be sustained. There was a press release that was issued at the end of the mission that has a bit more detail on that for Matthew. In addition I can say at the start of this week the IMF's Board approved an extension of Malawi's arrangement under that ECF until June 30, 2016 to provide additional time for authorities to implement structural measures under the program. There is a statement on this on our website.
We'll have more on this. Inner City Press also asked for updates on Burundi, Sri Lanka or Yemen, and these two questions:
On Saudi Arabia, I didn't see it in what was released this morning: what does the IMF think the impact of the Saudi-led Coalition's conflict in Yemen on the Saudi economy?
On Gambia, please say if the country has requested an $11 million or any other program, and summarize the relations / discussions between the Fund and the country.
Back on March 17 when the International Monetary Fund held its biweekly briefing, Inner City Press arrived in person with questions on Zimbabwe, Sri Lanka and Jamaica.
But it was not a normal briefing: it started with a paper about the International Monetary System, leaving the ten journalists -- all male -- present to fight for time to ask their questions.
An excellent -- the best - Greek journalist asked about Greece; Ukainian TV asked about a quote from Victoria Nuland then fought for question time with TASS. A Brazilian journalists asked if there will be a program.
Inner City Press jumped in with the Zimbabwe question, since the head of the Central Bank has been saying the country will get a loan up to $984 million in the third quarter.
Not so fast, IMF Deputy Spokesperson William Murray said. He had a long if-asked, which we'll insert here later. The upshot is that Zimbabwe still owes too much money, and despite support from (some) other states as an IMF meeting in Lima, the rules are the rules. At least for Zimbabwe.
Inner City Press also asked Murray to acknowledge that the windfall profits made off Argentina by vultures Singer and Dart wont' inevitably incentivize more predatory behavior. Murray said he wasn't going there. But the market will be: watch this site.
asked questions and got responses on Tunisia, Jamaica and Zimbabwe.
In Jamaica, after an extended period of austerity, a new government has been elected, led by the Jamaica Labour Party's Andrew Holness IMF spokesperson Gerry Rice said the IMF "takes note" of the new government and will hold discussions with it.
But what will it portend for the upcoming austerity-related benchmarks and reviews?
Inner City Press asked: "On Jamaica, what is the relation between the IMF's program and review(s) and the elections and their results? When will the review due March 15 be done?"
Rice answered: "There’s a question about Jamaica, what’s the relationship now between the IMF and Jamaica, given the elections, and when will the review, due on March 15th, be done. You know, clearly, we note the election of Mr. Holness and the GOP, the election results. We look forward to continuing to support Jamaica under its new leadership and we plan to discuss the economic priorities with the new authorities soon. Again, I’d note Mr. Holness has made clear during his campaign the intent to continue the reform program supported by the IMF, so we look forward again to a close policy dialog with the new leadership and geopolitical changes that the authorities and the staff have agreed to delay the discussions of the 11th Review for now, and I’ll come back when we have a date on that.
In Zimbabwe, despite a Staff Monitored Program, parliamentarians are complaining about the IMF's delay, moving toward new elections with no progress with the IMF.
Inner City Press asked: "On Zimbabwe, what is the IMF's response to criticism by parliamentarians that the normalization of relations under the Staff Monitored Agreement is taking too long and that if it does not speed up, the country will prepare for new elections without any meaningful progress with the IMF?"
Rice answered: " On Zimbabwe, what’s the IMF’s response to criticism from parliamentarians about normalization of our relations, is it taking too long? The status with Zimbabwe is that we have what we call a staff monitored program. We’ve had that for some time. It helps a country establish a policy record with a view to normalizing relations with creditors. We are also providing some technical assistance. We have an ongoing mission and it’s aimed at conducting the third and final review under that SMP, that staff monitored program, and the 2016 Article IV.
As you probably know, Zimbabwe is currently in arrears to the IMF and others and the strategy entails how to clear those arrears that are due to the IMF, the World Bank and others. The Zimbabwean authorities presented their plans for repaying their arrears during the annual meetings in Lima and that has received support from creditors and development partners. So successful completion of that SMP and a depending of ongoing reforms sets the stage for advancing the discussions about the reengagement process. That’s where we are on Zimbabwe. I’m going to leave it there for today. Thank you very much for your cooperation and patience this morning. I really appreciate it."
On Tunisia, Inner City Press asked: "On Tunisia, is a new IMF line of credit on schedule to be approved by the Board on April 22? What did Mr Blotevogel when he said “"Expected growth for 2016 does not correspond to the aspirations of the Tunisian people. It will not be strong enough to reduce unemployment.” What does the IMF recommend, then?"
Rice directed Inner City Press to a forthcoming press release: "There’s a question on Tunisia asking about asking about the status of the program with Tunisia. There’s an IMF mission in Tunisia until today negotiating a new four year Fund arrangement to support the authority’s program. And in fact, we’re going to be releasing a press release as soon as I finish here, so I can refer you to that. It will give the complete update on where we are on that matter."
Back on February 11, Inner City Press asked the IMF, "On Sri Lanka, please comment on and provide context for the reported request from the government for a new IMF program."
IMF Spokesperson Gerry Rice, after noting how Inner City Press submits its questions (electronically), replied that Sri Lankan authorities have expressed an interest in a program to deal with balance of payments. He said there would be a negotiating mission in late March or early April.
The embargoed briefing began with a read-out of the press release that there is no competition to Christine Lagarde for a second term -- similar to the way at the UN, there was no competition to Ban Ki-moon for a second term. Is this any way to run a multilateral, quasi universal international organization?
Inner City Press also asked about Romania (“Romania on Monday made the last interest payment on the 13 billion euro it took from IMF in 2009” and Dragos Tudorache, head of the Chancellery of the Prime Minister, has said "We don’t plan to conclude a new deal with the IMF” - please provide an IMF comment / response) and this, on Burundi:
"On Burundi, at the UN Peacebuilding meeting at the UN yesterday (Feb 10), the IMF said any new program would depend on relations with the international community. Please explain this, how relations with the international community impact an IMF program."
Back on January 14, Inner City Press submitted a number of questions, leading with Burundi and whether the Nkurunziza government's "income" from sending troops to Somalia and Central African Republic should be disclosed in the budget. See below.
On February 10 in the UN Peacebuilding Commission, while the IMF still didn't directly address the sleight of hand with the UN's peacekeeping funds, it presented a stark picture of Burundi's economy. It said GDP fell over four percent in 2015.
The IMF said any new program would depend on relations with the international community.
The World Bank's Bella Bird spoke by video from Addis Ababa; she said the World Bank still has $270 million of projects in Burundi, but said the government is closing down, not reaching out.
Burundi's Ambassador to the UN Albert Shingiro, after these critiques, went on and on bragging about blocking the proposed MAPROBU peacekeeper force in Addis, denouncing NGOs he left UNnamed and false media reports. He continues to block @InnerCityPress on Twitter. We'll have more on this.
Back on January 14, IMF spokesperson Gerry Rice read out Inner City Press' question then referred to the IMF's March 2015 sixth review, saying the government had committed to include the income from peacekeeping operations in the budget. Rice then said due to deterioration in the security situation, the seventh and eight reviews are not possible and the program is "off track."
On January 14 the IMF's Rice also noted the US Congress having approved quota reform (answering that he was not aware of any new oversight this might trigger), and said that Managing Director Lagarde will hold Greece meetings in Davos. Rice declined to answer ICP's question on Nigeria, saying much has been said on the topic; a Trinidad and Tobago question remained outstanding as the embargo time expired, but Inner City press was later on January 14 told on Trinidad and Tobago, the IMF's engagement with the country is one of economic policy advice or what we call surveillance. There is no program nor any talk of that, Inner City Press was told.
Back on December 5, 2015, Inner City Press also asked the IMF about Burundi (and Zambia), and Rice said following as to Burundi, audio here:
“In terms of the outlook in Burundi, it's effected by the decline in economic activity there and the . withdrawal of donor support. Confidence in the economy has been weakened by the political climate and adverse security developments. The growth rate in Burundi, which we had initially projected 5% in 2015, is now estimated at minus 4.1% in real terms.... In the current environment, completion of the 7th and the 8th review under our program there is not possible and as such, Burundi's program with the IMF, which is an ECF arrangement, is now off track.”
Inner City Press had also asked, on Zambia, it is reported that the IMF “proposed a $1 billion facility which the president had turned down. A sticking point for the president was the insistence by the IMF that government commit to drastic reductions in expenditure, particularly on road construction.” What is the IMF's response?
Rice said that no program has been “formally” requested, but that the Zambian authorities committed to “internal consultations.” Inner City Press had asked about Sri Lanka, and the same “no formal request yet” answer was given.Audio here.
Inner City Press also asked about Malawi and, lastly, Ghana; more on this to follow.
On October 29, Inner City Press asked IMF spokesperson Rice “in Jamaica, the National Democratic Movement has blamed the IMF for the country's 'health-care system becoming a national disgrace.' What is the IMF's response?”
Rice during the IMF's embargoed briefing read out this question, audio here, and said he does not agree, that Jamaica's 2015-16 budget includes an increase for the Ministry of Health. Audio of full answer here.
The IMF left unanswered, for now, Inner City Press' question about Antigua and Barbuda, below; there will be more about Dominica.
The IMF, it seems, should be more responsive: the Gleaner for example opines that “in 2014, Jamaica paid $138 million more to the IMF than it received from it. We are constantly being told Jamaica passed the IMF test. Look at the punitive primary surplus imposed on Jamaica. At 7.5%, it is way above what is being asked of any other country in the IMF program. It is 4% for Cyprus, 3% for Ireland, 3% for Greece, 3% for Portugal and a puny 1% for Ukraine. One has to wonder why Jamaica is being treated this way.”
Here are two other questions Inner City Press submitted on October 29, still without answer:
On Antigua & Barbuda, in light of recent comments by IMF Mission Chief Arnold McIntyre, what is the IMF's view of and comment on the information in the US FBI's charge sheet and indictment of Antigua's former ambassador (and former UN PGA) John Ashe, particularly with regard to corruption in the country?
In light of the UN Special Rapporteur's report on human rights (non) compliance by the World Bank, presented this week at the UN, please summarize how the IMF considers the human rights impacts on its decisions.
We'll have more on this.
Back on July 8 when the International Monetary Fund released reviews and papers about the United States, complete with support of the Dodd Frank Act and mentions of anti money laundering protection Inner City Press asked about the proposal to raise the definition of Systemically Important Financial Institution from $50 billion up to $500 billion and if tight AML strictures are to blame for cutting off remittances to Somalia.
Aditya Narain, IMF mission chief for the Financial Sector Assessment Program and deputy director, Monetary and Capital Markets department, told Inner City Press that the IMF believes such definition should give predictability, but should be based on risk and not necessarily only asset size.
Narain told Inner City Press, "On the first one, our general belief is that supervisory approaches should be risk based, and therefore the materiality and proportionality of institutions should be taken into account for to develop supervisory frameworks. At the same time, we also recognize that it’s important to have some clear rules, regarding a unit, in this case size of institutions, because not only does it set a baseline of expectations, but it also provides a useful framework for people to anchor their expectations on. So that’s why, in a sense we would agree that it’s important to make these approaches risk based and therefore not dependent on size alone. I should add also, that our only political ideology is financial stability, for the purpose of this exercise.
But will this be used FOR the Senator Richard Shelby draft bill?
On remittances, Aditya Narain said it is an important question but one that the IMF is dealing with in other venues; it apparently wasn't raised to the US during this process. Why not?
Narain told Inner City Press, "On the regulatory question, this is an issue which is being discussed in several forums where the IMF has been participating, and this is an issue not just for the US, although it has been most discussed in the context of the US, but the effects of the AML on remittances and the result, the stringent adherence to standards has led to a concern more globally that might be affecting the flow of remittances to those jurisdictions... where such remittances and the channels through which they flow are more important. We have not discussed this... there is work ongoing in the Fund, including in collaboration with other institutions like the World Bank... and we expect to be able to have more information on this in a few months time."
In the embargoed media conference call, two questions in a row went to the Financial Times, which opined that the IMF report takes the side of the Democratic Party. The IMF disagreed. The IMF said, in writing, “As the epicenter of the global financial crisis that began in 2008, the United States passed a major law in 2010, the Dodd-Frank Act, to reform its financial system. Officials need to complete the rulemaking under the law, while parts of reform agenda face legislative proposals to water them down.”
Central Banking asked two questions and Reuters one, on federal insurance regulation. Watch this site.