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By Matthew Russell Lee, CJR PFT NY Post

NEW YORK CITY, June 4 – When the International Monetary Fund held its biweekly embargoed media briefing on May 23, Inner City Press submitted four questions including on conflicts of interest, Republic of Congo, Barbados and Canada which the IMF answered, see below. Now on June 4 about South Sudan the IMF has said this: "On May 29, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Republic of South Sudan.  Since December 2013, South Sudan has been hit hard by a civil war and falling oil prices. The conflict along ethnic lines left hundreds of thousands dead, with severe social and economic consequences. A relapse into war in mid-2016 spread insecurity across the country and severely affected economic activities and exacerbated the humanitarian crisis and food insecurity. About 40 percent of the population are either internally displaced or live as refugees in neighboring countries and more than half of the population currently requires humanitarian assistance.  South Sudan is in a deep economic crisis. Economic conditions have deteriorated rapidly since the beginning of the civil conflict in late 2013. Real GDP is estimated to have declined by 2.4 percent in 2017/18 adding to a cumulated decline of about 24 percent in the last three years. Overall, real disposable income (adjusted for terms of trade) is estimated to have declined by about 70 percent since independence in 2011, contributing to an increase in poverty headcount ratio from 50 percent in 2012 to about 82 percent in 2016.  The peace agreement signed in September 2018 has improved the prospects for lasting peace and economic recovery. The cessation of hostilities last year has already enabled the reopening of some damaged oil wells, which pushed up daily oil production (export) by about 20 percent in February 2019. Inflation has gradually declined to about 40 percent in December 2018 from a peak of 550 percent in September 2016, while the exchange rate depreciated substantially in the last 18 months.  Fiscal policy has been weakened by the loss of fiscal discipline, deteriorating public financial management, and contracting of non-transparent oil advances, which have increased corruption vulnerabilities. Shortfalls in revenue translated into deep cuts in expenditure for other budget items, including wages and operating expenses, which contained the cash deficit to an estimated  2.8 percent of GDP in 2017/18. With cash rationing, arrears grew, and civil servants’ salaries lagged by at least 3 months. In the first half of 2018/19, the fiscal path was similar, running essentially a balanced cash deficit and maintaining 3–4 months of salary arrears.  The banking sector is yet to recover from the adverse effects of the civil conflict, high inflation and strong currency depreciation. Consequently, many domestic banks are heavily undercapitalized and face rising non-performing loans. " We'll have more on this.

Back on May 23 on Congo-Brazzaville Inner City Press asked, "what is the IMF's response to / comment or explanation on  the May 15 letter addressed to Congolese Prime Minister Clement Mouamba that "The advisers to the Republic wish to make you aware of the major risk of the programme’s rejection by the IMF’s board,” said Congo hired French financial advisers Lazard and more recently Parnasse, a firm employing former IMF Managing Director Dominique Stauss-Kahn, to assist it in the negotiations with the Fund. How is this not a conflict of interest?"

  IMF spokesperson Gerry Rice to his credit took the question, on camera, emphasizing that the discussion have been only between IMF staff and the authorities, no one else. He said that address the conflict of interest question. He also noted the IMF's May 9 announcement of a staff level agreement. But when will it go to the Board?

 On Barbados, Inner City Press asked for "   the IMF's response to Senator Crystal Drakes saying  that the Mia Mottley administration may have hit the benchmarks set under the IMF-sanctioned Barbados Economic Recovery and Transformation programme but is ignoring it’s sustained and impending collateral damage to the society.  “All of this has come at a social cost. Meeting those targets have been economic winds but socially we have paid a serious price for meeting those targets.  “In reducing our debt and closing the fiscal gap, Barbadians had to give up their wealth, particularly the vulnerable group of pensioners.  “Their disposable income through higher taxes and user fees, has resulted in persons falling below the poverty line.”

  Rice said the IMF's discussions had been with social partners including the unions and that the floor for social spending had been met, by an ample margin, in December and March.

 On Canada Inner City Press asked, "   On Canada, please explain how this IMF "advice" is not anti-poor: “The government is under pressure to ease macroprudential policy or introduce new initiatives that buttress housing activity,” said the IMF in its report.  “This would be ill-advised, as household debt remains high and a gradual slowdown in the housing market is desirable to reduce vulnerabilities.”  The tightened mortgage rules, brought in by Finance Minister Bill Morneau, mandated that would-be borrowers undergo a stress test to determine whether they could still make payments if faced with higher interest rates or less income.  In a report last month that calls for a rethinking of the mortgage stress test, CIBC economist Benjamin Tal estimated the measure accounted for more than half of a $25-billion, or eight per cent, drop in new mortgages last year." Rice said, among other things, that the IMF supports the government. More on this, including transcript, to follow. And on this:

  As China uses its Belt and Road Initiative to take over ports in Sri Lanka and prospectively Kenya, while using supposed NGOs to bribe UN officials including bidding on an oil company owned by Gulbenkian Foundations whose payments to UN Secretary General Antonio Guterres were omitted from his public financial disclosure covering 2016, even the IMF's Christine Lagarde is genuflecting in Beijing, albeit less cravenly than Guterres. Unlike Guterres' obsequious blue washing of BRI, Lagarde in her April 26 speech as least gently chided China for unsustainable loans. She said, "The BRI is clearly having an impact. From stimulating infrastructure investment to developing new global supply chains, some of the promises of BRI are being realized. Consider Kazakhstan, where a new manufacturing zone is beginning to unleash previously untapped economic potential. Or look at Senegal, where robust economic growth of over 6 percent in each of the last four years was supported partly by BRI-linked investment projects, including the construction of a new highway linking the airport to three large cities. At the same time, history has taught us that, if not managed carefully, infrastructure investments can lead to a problematic increase in debt. I have said before that, to be fully successful, the Belt and Road should only go where it is needed. I would add today that it should only go where it is sustainable, in all aspects." But what does this mean in terms of the BRI loans to Sri Lanka, and to the Kenya railroad? We'll have more on this.

When the International Monetary Fund held its biweekly embargoed media briefing on March 7, Inner City Press submitted five questions including on Haiti which the IMF answered. But on March 21 the IMF added this, that it hopes the "uncertainty" is resolved quickly. Inner City Press has submitted five new questions, unanswered as of the embargo time perhaps due to the IMF changing its media website and sign in: "On Congo-Brazzaville, what is the IMF's comment on the revolving door report that The Republic of Congo sought the assistance of former International Monetary Fund Managing Director Dominique Strauss-Kahn as the debt-strapped nation’s bid to secure a bailout stretches into a third year.  Strauss-Kahn and Lazard France Chief Executive Officer Mathieu Pigasse traveled to the Congolese capital, Brazzaville, in January for talks with President Denis Sassou Nguesso, Finance Ministry spokesman Adrien Wayi Lewy said? 

On Sri Lanka, what is the IMF's response to senior banker Rusiripala Tennakoon saying this IMF has failed to realize that the non-performing portfolio of the state banks will be in a worse situation in 2-3 months time.  He noted that by having to finance some of the state-owned enterprises, which are deteriorating the banks are running the risks of becoming undercapitalised.  Tennakoon noted that the IMF has failed to identify the impending danger the entire banking industry in the country is facing. He noted that especially, the state-owned banks and their non-performing portfolios are increasing tremendously signaling danger? 

What is the IMF's reaction to moves in the Marshall Islands toward the Sovereign (SOV) digital currency on an equal footing with the US dollar. It passed a key bill this week for SOV’s creation. "IMF has criticized the plans with a number of concerns including the risk of money laundering and that the Marshall Islands could lose its only corresponding banking relationship." What now? 

On Ukraine, what is the IMF's response, confirmation or denial to that Chairman of the Verkhovna Rada Committee on Legislative Support of Law Enforcement, Andriy Kozhemyakin, states that the U.S. and EU ambassadors, as well as the IMF mission, are asking to postpone consideration of bills regarding illegal enrichment. The statement came during the Conciliation Board meeting on Monday. Speaking of bills related to Article 368-2 of the Criminal Code of Ukraine (illegal enrichment), Kozhemyakin said: "The U.S. ambassador, the IMF mission, and the EU ambassador wrote me a letter today. They ask to postpone consideration of all draft laws as they are imperfect, including the presidential one." True? 

On Liberia, what is the IMF's comment on that the George Weah-led administration would be dealt a major blow amid the current economic turmoil as the biggest employer in the country’s private sector, Firestone Natural Rubber Company, announces the laying off of 800 employees.  “After a thorough and strategic review of its current operations in Liberia, West Africa, Firestone Natural Rubber Company, an indirect subsidiary of Bridgestone Americas, Inc., has announced the difficult decision to reduce its workforce by 13% (approximately 800 employees) by early second quarter of 2019?  Also if there are any updates on Cameroon or Morocco." On Cameroon, not unrelated to the DSK history, there is rarely an answer. Watch this site. Here's the IMF's March 7 transcript: "There is question on Haiti coming from Matthew Lee in New York. I'll take a couple of Matthew's questions as usual. And Matthew is asking about any updates I can give him on Haiti. And I can say that an IMF team is in Port Au-Prince as we speak to complete the Article IV consultation. But more than that, to discuss a possible IMF financial arrangement with Haiti. And we will hear more on that very, very soon.  But I can say that the mission will propose that what the mission will propose is highly concessional, on the most concessional terms we can offer for Haiti and it will highlight social protection. It will highlight the fight against corruption while deferring any fuel price adjustments until the government is able to guarantee that the most vulnerable will be protected from any negative effects.  Those of you who follow Haiti, you know, will understand the context of what I have just said. And again, the mission will communicate its findings at the end of the visit." Now, 11 hours later, the IMF announces this: "In response to a request from the Haitian authorities, an International Monetary Fund (IMF) mission led by Mr. Chris Walker visited Port-au-Prince from February 25 to March 8, 2019 to discuss IMF support for measures to ease poverty, encourage good governance, raise growth and stabilize the country’s economic situation. At the end of the visit, Mr. Walker issued the following statement:  “I am pleased to announce that in support of the government and the people of Haiti, we, the IMF, the Haitian government and the Central Bank of Haiti (Banque de la République d’Haiti (BRH)) have reached an IMF staff-level agreement on a concessional 0 percent, three-year loan of US$ 229 million for Haiti. This agreement will have to be approved by the IMF’s Executive Board, which is expected to consider Haiti’s request in the coming weeks.  “The agreement we have reached is aimed at helping Haiti overcome its current fragile state, and alleviating the hardship of the most vulnerable. We have placed social protection firmly at the center of the accord, and once the agreed measures are successfully implemented, the poorest in Haiti will be among the first to benefit in a tangible way.  The program provides money for a variety of social protection measures ranging from school feeding, through targeted cash transfers, to money for social housing.  “Priority has also been given to the fight against corruption and improvements in governance.  The IMF backs the government’s aim of state reform.  In its agreement, it has drawn up measurable targets to boost this fight with the goal of injecting greater transparency into the management of public finances, tax and revenue administration, as well as expenditure control.  “To enable Haiti to return to macroeconomic stability, the loan to Haiti represents 100 percent of quota, and the money will be disbursed over the three years of the program which is subject to regular Executive Board and staff reviews.  “The loan is offered under the IMF’s Extended Credit Facility (ECF) which allows lending at concessional rates and is aimed at stabilizing Haiti’s economy by putting its budget deficit on a downward trajectory and managing its debt, while protecting the poorest in the country.  “The visit also encompassed the IMF’s Article IV consultation, or its regular check of the health of the country’s economy.  Real growth remains near its four-year average of 1.5 percent.  The country has been facing severe financing constraints while political turbulence has discouraged private investment and limited action on needed fiscal reform.   “Under the program, we expect that financial constraints will be relaxed, allowing for faster growth.   “We at the IMF are ready to partner with Haiti on its economic revitalization. We will also encourage other multilateral agencies and countries to support the country. We have talked to partner agencies and they are willing to help. It would also be very helpful for Haiti’s bilateral partners to step forward at this critical time.  “The mission would like to thank the authorities and all those with whom they met for their warm welcome and the frank and constructive discussions.'"  We'll have more on this.

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