In Other Media-eg New Statesman, AJE, FP, Georgia, NYT,  Azerbaijan, CSM Click here to contact us     .

By Matthew Russell Lee, CJR PFT NY Post

NEW YORK CITY, Sept 24 – When the International Monetary Fund held its biweekly embargoed media briefing on September 12, Inner City Press submitted six questions including on Zimbabwe, Somalia, Sri Lanka, austerity, the DRC, the Marshall Islands and crypto-currency. The IMF answered one, on Zimbabwe (unlike the UN), but not entirely satisfactorily, see below.

 Now on September 24 on Sri Lanka just out from under embargo, this which cites the Easter terror attacks but remains silent like the UN's Guterres on the suspected war criminal put atop the country's army: "A staff team from the International Monetary Fund (IMF) led by Manuela Goretti visited Colombo during September 10-25, 2019 to conduct the sixth review under Sri Lanka’s economic reform program supported by a four-year Extended Fund Facility (EFF) arrangement. At the end of the visit, Ms. Goretti made the following statement: “The team reached understandings at the staff level with the Sri Lankan authorities on the sixth review of the EFF-supported program. The authorities are taking steps to complete all the pending actions and structural benchmarks for this review over the next few weeks. “The team welcomed the authorities’ efforts to normalize the security situation in the country after the tragic terrorist attacks in April and mitigate the impact of the shock on the economy. Real GDP growth was revised to 2.7 percent in 2019 and is projected to improve to 3.5 percent in 2020, as tourist arrivals and related activities gradually recover. Inflation is expected to remain stable at around 4.5 percent during 2019-20. Despite the recent fall in tourist arrivals and remittances, the current account balance is projected to improve to 2.6 percent of GDP in 2019 on the back of lower imports and stronger exports supported by the exchange rate correction in late 2018.  “Sustaining prudent policies and implementing institutional reforms remain critical to preserve macroeconomic stability, given the weak global outlook and Sri Lanka’s sizable public debt. “The protracted impact of the 2018 political crisis and the Easter attacks are significantly impacting fiscal performance. The end-June fiscal target was missed by a large margin, due to frontloading of spending from the clearing of arrears and externally-financed capital projects carried over from 2018 as well as a sharp fall in indirect revenues following the terrorist attacks. While the program targets agreed at the time of the fifth review are no longer within reach, the authorities are committed to achieve a primary fiscal surplus of 0.2 percent of GDP in 2019, through implementation of remaining revenue measures in the 2019 budget and prudent expenditure management. “The mission welcomed the authorities’ commitment to advance revenue-based fiscal consolidation in 2020 and over the medium term to preserve the gains achieved under the program, put the high public debt on a downward path, and provide space for better-targeted social and capital spending. Sustained efforts are needed to mobilize revenues, by broadening the tax base and enforcing compliance, and strengthen spending efficiency. To anchor public debt sustainability, the mission welcomed the authorities’ plans to revamp fiscal rules and establish an independent public debt management agency over the medium term, in line with international best practice. Improving the financial performance of SriLankan Airlines and advancing energy sector reforms, including by tackling cost inefficiencies and subsidies in the electricity sector, remain critical steps to reduce fiscal risks. “The mission supported the Central Bank of Sri Lanka (CBSL)’s prudent and data-dependent monetary policy approach and their renewed commitment to strengthen reserve buffers in line with program understandings. The CBSL should continue to allow for exchange rate flexibility and limit FX intervention to smooth excess volatility, in the event pressures from tighter global financial conditions were to intensify. The new Central Bank Act will be a landmark reform in the roadmap towards flexible inflation targeting by strengthening the CBSL’s mandate, governance, accountability, and transparency, in line with international best practice. “The CBSL adopted temporary measures to support the tourism sector and ease credit conditions in the aftermath of the terrorist attacks, including a debt service moratorium and caps on bank interest rates. These exceptional measures should be lifted as soon as credit conditions stabilize to avoid distortions to the financial system, amid weaker credit quality and falling profitability. The mission welcomed the ongoing efforts to strengthen the regulatory and supervisory regime for banks and non-bank financial institutions.... The team met with Prime Minister Wickremesinghe, Minister of Finance Samaraweera, State Minister of Finance Wickramaratne, Governor of the Central Bank of Sri Lanka Coomaraswamy, Secretary to the Treasury Samaratunga, Senior Deputy Governor Weerasinghe, other public officials, representatives of the Parliamentary Opposition, business community, civil society, and international partners."

  On September 12 Inner City Press asked the IMF: "On Zimbabwe, please confirm or deny IMF's Patrick Imam saying that "it is clear, compared to the projections of the original SMP, which did not foresee the severity of the drought and its secondary impact, nor the electricity shock, that growth is almost certainly going to be revised downwards and inflation upwards compared to the original SMP forecasts." And what is the IMF's view of the (economic) impact of the crack down on protest and human rights defenders?"

  Spokesperson Gerry Rice said that the IMF team is in Harare, from September 5 to 17. On human rights, he said the IMF "focuses on economics" and that such questions should be directed to... bilateral creditor. At least he didn't say the UN, which doesn't care. Here are Inner City Press' other questions to the IMF:

On Somalia, please provide a read out or response to reports that Somali Minister of Finance Abdirahman Duale Beyle met officials from the IMF  Addis Ababa to discuss the fourth phase of the Somali pardon program.

On Sri Lanka, what is the IMF's response to Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky, sayins that in Sri Lanka, there are concerns at the significant rise in the value added tax, given that the brunt of such taxes is often borne by the poorest?

More generally, what is the IMF's response to Bohoslavsky saying as to the IMF that "even though austerity can be a useful tool of administration against the squandering of resources, it is essential to keep in mind that austerity impacts the most vulnerable and marginalised"?

On crypto-currency what is the IMF's response to Marshall Islands Minister David Paul saying the country is moving forward with its plans. According to the post, Minister Paul will provide further details about the Marshall Islands’ crypto, the Sovereign, next week at the Invest: Asia 2019 conference?  Within months, the IMF began putting pressure on the Marshall Islands to not forego the U.S. dollar in favor of its own digital currency. The Fund issued a 58-page report in September 2018 and warned against the "potential costs arising from economic, reputational, AML/CFT, and governance risks" associated with the issuance of the Sovereign.

On the DR Congo, what is the IMF's knowledge of, and comment on, that all the big-name advisory banks are laying siege to the presidential palace in the hope of winning the contract to advise the DRC on its relations with the IMF?" Inner City Press also asked, again, for "any updates on Cameroon or Haiti or Yemen." Watch this site.

  Back on July 25, Inner City Press asked the IMF about Jamaica and Lebanon which the IMF answered, see below. On August 28 on Mali the IMF said, "On August 28, 2019, the Executive Board of the International Monetary Fund (IMF) approved a new three-year arrangement under the IMF’s Extended Credit Facility (ECF) for Mali in the amount of SDR 139.95 million (about US$191.9 million), as well as the release of the first disbursement under the arrangement of SDR 20 million (about US$27.4 million).  Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, made the following statement:  “Mali has made significant progress under the previous Fund-supported program despite challenging conditions. Looking ahead, while the economic outlook remains generally positive, it is subject to important downside risks related to possible challenges arising from the security situation, potential shocks to the terms of trade (the price of gold, cotton, and fuels), and adverse weather conditions.  “The authorities’ corrective measures taken in the first half of 2019 have significantly improved domestic revenue collection. Going forward, decisive efforts aimed at domestic resource mobilization through tax policy and revenue administration reforms will be key to meeting the ambitious, but realistic program targets. The fiscal framework of the program is robust and adequate mechanisms are in place to deal with any revenue shortfall.  “The authorities’ reform strategy for the state-owned electricity company (EDM-SA) is welcome in view of its strategic importance for the Malian economy. The authorities are encouraged to seek participation from the commercial banks in the financial restructuring of the company.  “Going forward, it is essential to pursue greater spending efficiency, including through strengthened project selection and execution, as well as the rationalization of subsidies. The authorities’ efforts to increase financial inclusion and narrow the gender gap, including by direct measures to economically empower women are welcome. Steadfast perseverance in the government’s efforts to improve governance and fight corruption would also enhance the business climate." Yes it would. But will this fight against corruption happen? Watch this site.
On July 25 on Jamaica Inner City Press asked, "given that the $1.6-billion Precautionary Stand-By Arrangement comes to an end in November, please state and explain what the functions will be of the IMF office that, unlike elsewhere, is to remain in the country for two years after the expiration of the SBA." Spokesman Gerry Rice, after reading out the question from "our friend Matthew Lee in New York" - these days covering it from the U.S. District Court for the Southern District of New York SDNY amid cases about for example Nigerian oil and GSE bonds - replied that it is be no means unheard of for the IMF to keep and office behind after a program. Inner City Press might add that it has given rise to enough concern among some Jamaicans that the IMF wrote to the Gleaner... 

From the IMF transcript, Rice: "On that one, I'd like to refer to a letter that was actually published by our mission chief in Jamaica, Uma Ramakrishnan and that was published in the Glean[e]r newspaper in Jamaica just yesterday. So, I urge you to take a look at that. I would also add that since 2013, we have had consecutive IMF-supported programs. Jamaica has established an exemplary track record of economic reform achieved through commitment and implementation of the Economic Reform Program. Now in that context then, IMF and the Jamaica Government consider it useful to have that office open, remaining open in Jamaica with the ResRep to continue the support in the post-program period, and as we transition from program to the Article IV annual process with Jamaica, and to continue to support Jamaica with capacity building. And what I can say is, you know, the question said that this as suggested that this was unlike elsewhere. In fact, this is not an unusual arrangement, so it's not unique to Jamaica by any means."

On Lebanon Inner City Press asked, "what is the IMF's comment on or response to PM Hariri having said, "I know the IMF has some reservations, but also if we want to adopt everything the IMF does ... (well then it also) proposes that we leave the Lebanese pound to float, that it go up and down as it wants." The IMF had also requested an increase of fuel excise in addition to an increase in VAT, Hariri said.  What is the IMF's comment?" On this, Spokesperson Rice said, "What's the IMF's comment on that? I would refer you to the recent concluding statement of our staff mission to Lebanon which said, amongst other things, rebalancing the economy in the current framework of an exchange rate peg requires strong implementation of a large and credible fiscal adjustment and ambitious structural reforms." We'll have more on this.

More here.

***

Feedback: Editorial [at] innercitypress.com

UN Office: S-303, UN, NY 10017 USA

Reporter's mobile (and weekends): 718-716-3540

Search innercitypress.com  Search WWW (censored?)

Other, earlier Inner City Press are listed here, and some are available in the ProQuest service, and now on Lexis-Nexis.

 Copyright 2006-2019 Inner City Press, Inc. To request reprint or other permission, e-contact Editorial [at] innercitypress.com for