Saturday, December 10, 2016

ICP Asks IMF About Guinea Bissau's Bank Bailouts, No Deadline to Unwind

By Matthew Russell Lee

UNITED NATIONS, December 8 -- When the International Monetary Fund held its biweekly briefing on December 8, Inner City Press submitted a number of questions, including this one about Guinea Bissau:

"On Guinea-Bissau, by when does the IMF expect authorities to entirely unwind the bailouts of Banco da Africa Ocidental and Banco da União?"

  Not at the briefing, but ten hours later, an IMF spokesperson provided this answer, which we publish in full:

"The question of the legality of the bailout contracts is currently with the courts in Guinea-Bissau and there is no deadline by which the courts have to pronounce their verdict. IMF staff are monitoring these developments. As such, at this stage it would be speculative for us to make any statements about the estimated timing for the complete unwinding of the bailouts. Overall, IMF staff welcome the authorities’ resolute stance in unwinding the bank bailouts. Following through on all steps until the bailouts are irreversibly unwound will be important to safeguard public finance. To strengthen the banking sector, it will also be necessary to implement remedial actions that are being elaborated through regional banking supervision and to enforce existing prudential norms.’"

  Inner City Press also asked about Egypt:

"In Egypt, is it the IMF's understanding that none of the first tranche will be used to pay off old loans? Also, any comment on the arrest of Azza Soliman, amid the crackdown on civil society and the media?"

  IMF Spokesman Gerry Rice lumped most of the online questions together - with the exception of Reuters, which he named in order to offer a defense of “Madame Lagarde” - and on Egypt's recent tariff increases said these are NOT part of the IMF's program.

 Rice blamed the tariff increases, rather, on the World Trade Organization. He added that the IMF's staff report and other documents should be released very soon, in the next few days. We'll have more on that.

   Rice and the IMFdid not answer, or even take, this Inner City Press questions:

At the UN the Group of 77 and China has said of the IMF that “a new quota formula is needed that further shifts quota shares to developing countries while protecting the quota share of the poorest countries.” Does MD Lagarde agree?

  We'll have more on this in the near future.

Back on October 27, Inner City Press asked three questions including:

"On Yemen, what is the IMF's view and monitoring of President Hadi's action to move the Central Bank to Aden, including impact on the humanitarian situation?"

IMF spokesperson Gerry Rice read out the question and then said moving the bank is complicated, that the bank has done a good job. Beyond the Vine video of complete answer here. 

He did NOT say that Hadi may be on his way out, even under UN envoy Ismail Ould Cheikh Ahmed's most recent proposal. So by what right would Hadi further help starve Yemenis? We'll have more on this.

From September 1:

"On Yemen, IMF Mission Chief Albert Jaeger has urged the Central Bank and the government to cooperate. What is the IMF's view of President Hadi's proposal to move the Central Bank to Aden, and his complaints against the Central Bank and its Governor?" IMF video here, from Min 41:54.

IMF Spokesperson Gerry Rice read out the question -- without the name of Albert Jaeger or Inner City Press -- and offered praise of the Central Bank governor, citing the Bank's public letter. (Click here for UN envoy's in-person answer to Inner City Press on August 31.)

Inner City Press asked, about Mozambique: "On Mozambique, outgoing IMF Representative Alex Segura has been quoted that IMF insists on international audit of Mozambique’s public debt. Please confirm, and describe the goals of this month's IMF mission to Mozambique."

Rice said there will be a mission in Maputo on September 22.

Inner City Press also asked, "On Zimbabwe, what is the status of the government's moves to clear its arrears to the IMF?"

Rice said there is NO financial program under discussion and can't be until arrears are cleared.

UNanswered were these two:

In Serbia, Energy Minister Aleksandar Antic said the 3.8 percent electricity price increase to comply with conditions set by the IMF in return for a $1.34 billion loan was the “smallest possible increase, half the amount the IMF asked for.” Is that the case?

In South Sudan, the government has adopted a budget for the 2016/17 fiscal year which nearly tripled spending at $520 million; Finance Minister Stephen Dau said “it contains reform measures that were advised by the IMF in their consultation when they came here last May.” Is that the case? Please describe the IMF's work with South Sudan, as the UN Security Council prepares to visit there."

 At the September 1 briefing, IMF Spokesperson Gerry Rice said the IMF board expects to take up Ukraine in the second half of September. He confirmed that an IMF staff member was just named the governor of the Central Bank of Mozambique -- shades of the film "Our Brand Is Crisis" -- while saying he'd look into whether the ex-IMF staffer in Greece worked for the Fund in 2010 or after.

On July 14 Inner City Press asked four questions including this one:

Inner City Press: On Lebanon, Jordan and other formally “middle income” countries with refugee issues, the World Bank has reportedly shown flexibility. Is the IMF still banning them from concessionary financing?

Spokesperson Gerry Rice read out the question and said the IMF has shown flexibility in Jordan to provide fiscal space on the refugee issue and encouraging donors to provide concessionary financing. Inner City Press has asked the UN's Sigrid Kaag about Lebanon, as previously reported. Two other questions Inner City Press has asked the IMF:

On South Sudan, amid the fighting on July 9 President Salva Kiir said his gov is working with IMF to resolve the economic crisis. Please describe that work, and state whether IMF is evacuating or trying to evacuate its staff from Juba;

In Yemen, there has been a significant decline in foreign currency reserves, causing a significant devaluation in the Yemeni Rial. What if anything is the IMF doing on this?

From June 16:

Inner City Press: On Sri Lanka, what is the IMF's view of the reported adoption of a capital gains tax, and what did Mission chief Todd Schneider mean by expeditious resolution of Srilankan Airlines' financial issues: how soon, and resolved how?

After the briefing, an IMF Spokesperson replied to Inner City Press: "We see the introduction of a capital gains tax as a positive development and in line with recommendations to broaden the tax base and raise tax revenue from its current low level.

 "Regarding the issue of Sri Lankan Airlines, the three-year Extended Fund Facility (EFF) program recently agreed with the government and approved by the Executive Board of the IMF contains a structural benchmark for the Cabinet to approve a resolution strategy for Sri Lankan Airlines by September 2016."

Actually answered during the June 16 briefing:

Inner City Press: "In Belarus, finance ministry deputy Maxim Ermolovich this week said that "All the preliminary conditions that were discussed by the government have been implemented. We expect an appropriate response from the IMF and the start of a new program.” Does the IMF agree? What is the timing?"

IMF spokesperson Gerry Rice read out the question - without naming minister Ermolovich - and said that the IMF is visiting the country from June 21-30 then will have more to say.

Inner City Press also asked, on Mozambique: "In Mozambique, as the IMF mission began yesterday, the metical fell 10% and a coalition of 26  civil society groups say that $1.86B of loans were corrupt and should not be paid; experts cite anger among donor nations after the government ran up more than $2 billion in private debt deals behind their back. What is the IMF's thinking on the $1.86B in loans, and the currency decline?"

Rice answered this one in the DC briefing room, emphasizing that all undisclosed loans, whatever their purpose, should be transparently and publicly disclosed.

ICP Iraq: In Iraq, Abadi financial adviser Mudher Salih said the IMF has been informed of the approval of required measures. Is this the case, including the settling by the end of the year all arrears owed to foreign oil companies operating in Iraq?

Later in the morning, on Iraq, this was received:

"The Iraqi authorities and IMF staff are in close contact about the prior actions for the Stand-By Arrangement, two of which (circulation of revised fiscal program to Parliament, circulation of revised spending plan to line ministries) still need to be met. Payment of all arrears to international companies by end-2016 is part of the program."

This question, along with Inner City Press requests for updates on Yemen and Burundi, is still pending:

ICP: On Colombia, in the IMF's expansion this week to a Flexible Credit Line of $11.5 billion, what consideration was given to the government's near-peace with the FARC, and talks with the ELN? What are and would be the economic impact of these?

  Watch this site.

Back on June 3, an IMF Spokesperson sent Inner City Press these responses:

Inner City Press: 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.

IMF Spokesperson, June 3: "The Gambian authorities have not requested a program with the IMF. If the government requests a program, IMF staff will respond as they normally do, following standard procedures for responding to a member country’s request for financial assistance from the IMF.

"Gambia’s economic situation in 2014-15 was impacted adversely by the regional Ebola outbreak and delayed rains. In response, the IMF supported the authorities’ efforts to address these challenges through a Rapid Credit Facility (RCF) disbursement ($10.8 million) in early April 2015 and a Staff-Monitored Program (SMP). Additional slippages have pushed the SMP off-track and IMF staff are working closely with the authorities in their efforts to come up with corrective measures."

Inner City Press: In South Sudan, the IMF's Jan Mikkelsen suggested 'cutting expenditures, particularly in the payroll, current operations, travel, and investment.' Investment in what?

IMF Spokesperson, June 3: "On investments, our recommendation is to consider the postponement of domestically financed investments at least by a year. However, donor-financed investments could continue as planned. It is also worth noting that donor-financed investments are much larger than domestically financed investments."

Inner City Press: Ivory Coast says it must check with the IMF about its proposed tax breaks to locally based cocoa grinders, a senior finance ministry official said yesterday. Is it true that the country must consult with the IMF? What factors will the IMF consider?

IMF Spokesperson, June 3: "It is up to the Ivory Coast authorities to decide how to proceed. But it is also the case that Fund staff has long pointed to the tension between the often substantial loss of tax revenues that exemptions can engender and the large health, education and infrastructure spending needs that have been identified by the government. The more recourse there is to tax exemptions, the fewer resources there will be for addressing the countries development spending needs."

Still UNanswered: In Malawi, President Mutharika has been quoted as to Cash-gate that “the IMF has told me the effects will be here for the next 13 years.” Is that accurate?

"In Suriname, opposition leader  Chandrikapersad Santokhi has publicly complained that the IMF did not have discussions or contacts with the opposition prior to the recent loan. Is that true? How widely did the IMF consult in the country?"

And: what does the IMF think the impact of the Saudi-led Coalition's conflict in Yemen on the Saudi economy?

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.

  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
  We'll have more on this.