Thursday, March 14, 2013

In Tunisia, IMF Asks of Ennahda Government's Mandate, of Sri Lanka and Moody's, Malawi Arrest

By Matthew Russell Lee
UNITED NATIONS, March 14, updated – The engagement of the International Monetary Fund in what's called the Arab Spring remains halting – or halted.
On Thursday Inner City Press asked IMF deputy spokesman William Murray, “In Tunisia, what is the status of IMF programs in light of unrest including over reduction of subsidies and rising prices, and the now shorter-term government?”
  During the IMF's embargoed briefing, Murray replied that our negotiations for a precautionary stand-by arrangement are ongoing on a technical level. As you noted, a new government has been formed. Staff is now inquiring about its intention and mandate.
The new government, including Ennahda, says it will only stay in power until elections later this year. What mandate does it have?
Taxi drivers are set to go on strike on March 18. The Tunisian Organization for Consumer Protection has called for protests against fuel price hikes.
In late February, Moody’s Investors Service joined other rating agencies, cutting Tunisia’s credit rating to near junk status.
Inner City Press has asked the IMF another question about Moody's: “On Sri Lanka, now Moody's says, 'A new IMF funding program would have helped build up foreign reserves.' How does that square with IMF's previous answers about no new program? (Moody's report is called 'Sri Lanka — The Post-IMF Backdrop: Downward Growth Pressures and Elevated External Pressures.')”
Inner City Press has also asked, among other questions, for the IMF's comment if any “on the arrest of former IMF VP Goodall Gonde in Malawi.” 
From the IMF's transcript:
MR. MURRAY: That's obviously to be discussed. I don't have guidance on that. Let me get to a couple of questions here on the Media Briefing Center and then I'll get back to you. Let me read it out:
INNER CITY PRESS: "In Tunisia, what is the status of IMF programs in light of unrest, including reduction in subsidies and rising prices, and now a short-term government?"

MR. MURRAY: Negotiations for a precautionary Stand-By Arrangement are ongoing at a technical level with the Tunisian authorities. As you noted, a new government has been formed and staff is now inquiring about its intentions and mandate. In any case, the IMF continues to stand ready to help Tunisia in any way deemed necessary during this difficult political transition process.
Update: this was answered, after the embargo time, with this: "regarding your comments, we have no comments on the Gondwe case." But a former IMF official is charged with treason and plotting a coup... On Sri Lanka, this: 
"Matthew: We have nothing more to offer than what I mentioned in my last email to you—along with the latest press release I attached.  A bit puzzled by your question—and not sure where you are headed.
An IMF-supported program could have helped Sri Lanka build up their reserves and, more importantly, boost market confidence. The mission and the authorities explored the possibility of a new IMF program designed to build on Sri Lanka’s achievements under the SBA. Productive discussions took place on a number of issues, including further fiscal and related reforms that would consolidate and extend these achievements.   However, the authorities announced that they were not continuing negotiations with us since they wanted our assistance only if it was in the form of budget support, which we were not able to provide. From our side, we had some concerns about the budget, and in particular about weak government revenues, that would in any case have required substantial further discussion. The mission and the authorities will stay in close touch and continue the close partnership between Sri Lanka and the IMF. "
But on February 14 the IMF told Inner City Press, "In view of Sri Lanka’s ready access to international capital markets, IMF financial support for Sri Lanka’s budget is not required at this juncture." Now even Moody's says different. Where is this going?