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Time	Speaker	Text
00:00:09	>>	EFFORTS TO HELP NATIONS IN THIS ECONOMY. HERE'S THE HOUR-LONG EVENT HOSTED BY THE NATIONAL PRESS CLUB.
00:00:21	>>	GOOD AFTERNOON AND WELCOME FOR OUR SPEAKER TODAY. MY NAME IS DONNA AND I'M A REPORTER FOR USA TODAY AND PRESIDENT OF THE NATIONAL PRESS CLUB. WE'RE THE WORLD'S LEADING PROFESSIONAL ORGANIZATION FOR JOURNALISTS AND ON BEHALF OF OUR 3,500 MEMBERS WORLDWIDE I WELCOME EVERYONE. AND I'D LIKE TO WELCOME THOSE OF YOU WATCHING ON C-SPAN. WE'RE CELEBRATING OUR 100th ANNIVERSARY THIS YEAR AND WE HAVE REDEDICATED OURSELVES TO A COMMITMENT TO A FUTURE OF JOURNALISM THROUGH INFORMATIVE PROGRAMMING, FOSTERING A FREE PRESS WORLDWIDE. FOR MORE INFORMATION YOU CAN VISIT OUR WEBSITE AT PRESS.ORG. WE'RE LOOKING FORWARD TO TODAY'S SPEECH AND AFTER WARDS, I'LL ASK AS MANY QUESTIONS FROM THE AUDIENCE AS TIME PERMITS. HOLD YOUR APPLAUSE DURING THE SPEECH SO WE HAVE TIME FOR AS MANY QUESTIONS AS POSSIBLE. FOR OUR BROADCAST AUDIENCE, I'LL EXPLAIN THAT IF YOU HEAR A PAUSE IT MIGHT BE FROM THE GUESTS AND GENERAL PUBLIC WHO ATTEND THE LUNCHEON AND NOT NECESSARILY FROM THE WORKING PRESS.
00:01:30	>>	NOW I'LL INTRODUCE OUR SPEAKER. IT HAS OFTEN BEEN SAID WHEN THE U.S. ECONOMY CATCHES A COLD THE REST OF THE WORLD CATCHES PNEUMONIA. WITH THE UNEMPLOYMENT RATE APPROACHING 10% AND BANKING, HOUSING, AUTO PLAINTIFFING AND OTHER SECTORS OF THE ECONOMY IN TROUBLE, THE U.S. HAS WAY MORE THAN THE SNIFFLES. THAT MEAN THAT IS ECONOMIC HARDSHIP AND POTENTIAL POLITICAL INSTABILITY IN MUCH OF THE REST OF THE WORLD. EARLIER THIS MONTH, THE WORLD'S MAJOR ECONOMIES AGREED TO SUBSTANTIALLY BOOST THE SYSTEMS TO LESSER DEVELOPED NATIONS THAT ALLEVIATE -- TO ALLEVIATE THE RECESSION'S IMPACT ON THE COUNTRIES THAT CAN LEAST AFFORD DECLINES IN THEIR STANDARD OF LIVING. THE GROUP OF 20 NATIONS PROMISED TO ADD 500 BILLION TO THE AMOUNT OF MONEY AVAILABLE THROUGH LENDING THROUGH THE WASHINGTON-BASED INTERNATIONAL MONETARY FUND. SOME OF THE $750 BILLION THAT WILL BE AVAILABLE WHEN THE NEW PLEDGES ARE MET WILL BE LENT TO WELL-MANAGED ECONOMIES WITHOUT REFORM PRECONDITIONS IN HOPE OF HEADING OFF ECONOMIC CRISES. TODAY'S SPEAKER HAS BEEN MANAGING DIRECTOR OF THE INTERNATIONAL MONETARY FUND SINCE NOVEMBER OF 2007. HE'S AN OLD HAND ADD NAVIGATING COMPLEX POLITICS HAVING SERVED THREE TERMS IN FRANCE'S NATIONAL ASSEMBLY. HE WORKED ASS A AORPORATE LAWRR ANDECONONICIC'S PFESSOR AND HE WITHS S TOYY T TO EXPLAIN WW THE FF PLA T TO HELP DEVELOPING COUNTRY WHETHER THE ECONOMIC STORM AND PEPEFULLY, AVOID A SIMILAR CRISIS IN THE FUTURE. PLEASE WELCOME TO THE NATIONAL PRESS CLUB, THE MANAGING DIRECTOR OF THE IMF, MR. DOMINIQUE STRAUSS KAHN.
00:03:22	>>	THANK YOU. I'M HAPPY HEAR THAT YOU WILL HOLD YOUR APPLAUSE. I WAS AFRAID THAT EACH SENTENCE WILL BE -- WILL NEED A MINUTE OF APPLAUSE, SO LET'S GO FORWARD. I'M REALLY DELIGHTED TO BE HERE THIS AFTERNOON AND HAVE THIS OPPORTUNITY TO TALK ABOUT THE GLOBAL FINANCIAL CRISIS AND HOW THE IMF SEES THE CHALLENGES FACING US AT THE MOMENT. LET'S TAKE STOCK ON THE EVE OF THE SPRING MEETING. WE HAVE OUR SPRING MEETING NEXT WEEK. AND I THINK THE FIRST THING TO SAY IS THAT WE HAD A HIGHLY SUCCESSFUL SUMMIT, THE G-20 IN LONDON AND I WAS IMPRESSED BY THE PRECISION OF LEADERS FOR THE SERIOUSNESS OF THE GLOBAL RECESSION. WHAT I CALL "THE GREAT RECESSION." AND, ALSO, THEIR COMMITMENT TO TAKE ACTION. ONE BIG STORY OF THE SUMMIT WAS THAT IMF EMERGE AS A WINNER, GIVEN THE TRIPLING OF RESOURCES. I THINK THIS GETS IT BACKWARDS. THE REAL WINNER OF THE SUMMIT IS CERTAINLY THE GLOBAL ECONOMY AND THE WAY THE SUMMIT GIVES SOME HOPE FOR FINDING A WAY OUT OF THE CRISIS. LEADERS WERE FOCUSED ON WHAT HAS TO BE DONE AND MANY OF WHAT HAS TO BE DONE -- MANY THINGS INVOLVED AT IMF. THEY FOCUS ON URGENT ACTIONS, RESTORE GROWTH TODAY, BUT ALSO SOLVE THE PROBLEMS OF TODAY, WHICH ARE AT THE ROOT OF THE CURRENT CRISIS. AND SO, I THINK THAT AFTER THIS MEETING, REALLY WHICH WAS A GOOD MEETING THAN A LOT OF MEETINGS LIKE THIS IN THE PAST, THIS WAS REALLY AN EXCEPTIONAL ONE SO I THINK THAT WE ALL KNOW WHAT WE HAVE TO DO. WE HAVE A MANDATE TO DO IT. JUST LET'S DO IT. AND FOR ITS PART, THE IMF IS READY TO PLAY ITS ROLE. SO I THINK WE ALL UNDERSTAND WHAT IS AT STAKE. 2009 WILL BE AN AWFUL YEAR. WHATEVER HAPPENED NOW IT'S ALREADY DONE. THE GLOBAL GROWTH WILL BE DEEPLY NEGATIVE. AND THE IDEA THAT WE'RE REALLY FACING THE FIRST GLOBAL CRISIS IS NOW UNDERSTOOD BY EVERYBODY. OBVIOUSLY IT ORIGINATED IN THE ECONOMY IN THE UNITED STATES. AND SPREAD LIKE WILDFIRE ACROSS THE WORLD. WHAT IS NEW SINCE THE BEGINNING OF THIS YEAR, MAYBE, IS THAT NOW THE EMERGING MARKETS ARE HIT HARD, FACING A DOUBLE PUNCH, A SHARP DROP IN EXPORTS BECAUSE OF THE SLOWDOWN OF THE GLOBAL ECONOMY AND THE SUDDEN STOP OF CAPITAL INFLOW THAT THEY HAVE BEEN RELYING ON. THIS IS OKAY FOR EMERGING COUNTRIES. AND THOSE ARE JUST DRYING UP. SO ALL THIS THREATENS TO UNDO WHAT HAS BEEN GAINED DURING THE LAST DECADE IN THE EMERGING MARKET BUT, ALSO, MAYBE MORE IMPORTANT, IN LOW-NICK KMIS AND COUNTRIES, WHERE IT'S BY EXCEPTIONALLY GOOD, ESPECIALLY IN AFRICA, AS THE RATE OF GROWTH, AND ALSO, THE CRISIS ARRIVED AT THE SHORES OF LOW-INCOME COUNTRIES THREATENS TO CAST MILLIONS INTO POVERTY. THE GOOD NEWS THAT THE FREEFALL IN THE GLOBAL ECONOMY MAY BE STARTING TO ABATE. RECOVERY, AS WE SAID FOR MONTHS, IS POSSIBLE IN OUR FORECAST IN THE FIRST HALF OF 2010. BUT THE BAD NEWS IS THAT IT DEPENDS -- IT'S NOT DONE. IT DEPENDS CRUCIALLY ON THE RIGHT POLICY BEING ADOPTED TODAY. ON THIS QUESTION ETHERE IS A MIXED GOVERNMENT. WE HAVE ASKED THE IMF FOR THREE THINGS. THE FIRST ONE IS THE FINANCIAL SECTOR REFORM. THE SECOND ONE WAS THE FISCAL STIMULUS AND THE THIRD ONE WAS BIGGER SUPPORT FOR EMERGING COUNTRIES. WE'LL TAKE THIS ONE BY ONE. ON THE FIRST POINT IT'S CLEAR WHAT WE NEED NOW, THE MOST URGENT, IS TO FIX THE FINANCIAL SECTOR. IT'S ESSENTIAL. THERE'S NO WAY FOR RECOVERY IN THE GLOBAL ECONOMY WITHOUT THIS. THE IMF HAS EXPERIENCE OF HANDING THE BANKING CRISIS IN DIFFERENT COUNTRIES. IT'S DIFFERENT COUNTRIES AT DIFFERENT TIMES SO YOU CANNOT JUST BE TOO EASY. AND AMONG THOSE VERY LITTLE NUMBER OF CONSTANT ONE IS THAT YOU NEVER RECOVER BEFORE YOU FIX THE PROBLEM IN THE FINANCIAL SECTOR. IT MAY LAST VERY LONG IF YOU DON'T DO IT. AND AT THE END YOU HAVE TO FIX THE FINANCIAL SECTOR, TOO. SO THE CLEANSING OF THE BANK'S BALANCE SHEET IS THE MOST IMPORTANT THING TO DO. RESTRUCTURING THE BANK AND RECAPITALIZE WHEN NEEDED. FROM THIS POINT OF VIEW, THE NEW U.S. PLAN IS A MAJOR STEP FORWARD, EVEN IF EVERYBODY UNDERSTANDS THAT ITS SUCCESS RELIES ON PARTLY ON THE WILLINGNESS OF THE BANKS TO SELL TOXIC ASSETS. THE SECOND NEED WAS THE NEED OF A GLOBAL FISCAL STIMULUS. AS SOON AS JANUARY OF 2008, THE IMF ASKED FOR THE STIMULUS AND IT FOUND THIS TIME A LITTLE ODD THAT MY INSTITUTION WHICH IS MORE KNOWN FOR BUT THE VIEW WE HAD AT THIS TIME FOR THE GLOBAL ECONOMY IS THAT THE SLOWDOWN WILL BE VERY BIG AND WE NEED THE GLOBAL LEVEL FOR THIS KIND OF STIMULUS. SO WE ASKED FOR A 2% STIMULUS AT THE GLOBAL LEVEL AND I MUST SAY THAT GLOBALLY, THE COUNTRIES DID DELIVER FOR 2009 AND THE GLOBAL STIMULUS ACCOUNTS MORE OR LESS FOR THIS 2%. LATER, IN 2009, WE HAVE WHAT WE NEED. ONE POINT I WANT TO STRESS IS THAT I HAVE A LOT OF THINGS ABOUT THE LACK OF COORDINATION AMONG DIFFERENT COUNTRIES AND WE CAN'T ALWAYS ASK FOR MORE COORDINATION BUT, FINALLY, IT'S THE FIRST TIME EVER THAT YOU SEE THE LEVEL OF THE GLOBAL ECONOMY SUCH COORDINATION. THE FACT THAT ALL THE COUNTRIES WHICH HAD SOME FISCAL RULE USE THE FISCAL RULE TO FACE THE SAME PROBLEM AT THE GLOBAL LEVEL. AND THE THIRD THING IS URGENT ACTION ON THE FRONT. ESPECIALLY TO ALLEVIATE PRESSURE ON EMERGING MARKETS. THIS PROBABLY IS THE REALLY WHAT THE G-20 WAS THE BOLDEST IN TRIPLING THE RESOURCES OF THE IMF, ITS LENDING CAPACITY TO AN UNPRECEDENTED $750 BILLION, REALLY THE G-20 TOOK THE MEASURE OF THE CHALLENGE. AT THE SAME TIME THE DECISION HAS BEEN MADE, AS YOU KNOW TO DOUBLE THE LENDING CAPACITY WHICH IS WHAT GOES TO LOW-INCOME COUNTRIES AND TO EXPAND THE GLOBAL CURRENCY BY -- WITH $250 BILLION OF -- PROBABLY YOU'LL HAVE A QUESTION ABOUT THAT AND I WOULD BE HAPPY TO ANSWER IT. ALL THIS HAS REINFORCED THE SYMBOL THAT IMF WAS THE LENDER LAST RESORT WHICH HAS BEEN COME TO BE AND HAS THIS ROAD TO PLAY. SO THAT'S THE THREE URGENT PRIORITIES. AND THAT'S ABSOLUTELY NECESSARY STEP FOR RECOVERY. WHAT IS ALSO INTERESTING IS THAT AT THE SAME TIME IN THE LAST MONTH, THERE HAVE BEEN OTHER DECISIONS WHICH HAVE BEEN MADE. AND MAINLY LINKED TO THE FACT THAT THERE WERE CLOSINGS BY THE FLOWS IN THE NATIONAL AND INTERNATIONAL FINANCIAL ARCHITECTURE AND THAT IT WAS NEEDED TO FIX THIS. IN FACT, I'LL GO VERY FAR, I THINK, FOUR KEY ARENA IN WHICH WE NEED TO DO SOMETHING GOING FORWARD. BETTER REGULATION OF THE FINANCIAL SECTOR. CIVILIANS OF THE WORLD ECONOMY. FINANCING OF THE EMERGING AND LOW-INCOME COUNTRIES AND SOMETIMES THE ADVANCED ECONOMY. AND INTERNATIONAL COOPERATION. AND IN MOST OF THEM, IF NOT IN ALL OF THEM, THE IMF HAS A KEY ROLE TO PLAY. BETTER REGULATION, I THINK THAT'S OBVIOUS TO EVERYBODY THAT THIS CRISIS HAS SHOWN THE LIGHT OF THE FAILURES OF THE FINANCIAL REGULATION AND MARKET DISCIPLINE. SO THE IDEA THAT WE NEED BETTER REGULATION FINANCIAL INSTITUTIONS IN DECISION, THAT IN RETROSPECT PROVES HIGHLY RISKY, ALL THIS I THINK IS IN EVERYBODY'S MIND. TO STRENGTHEN THE FINANCIAL REGULATION AND SUPERVISION IS A KEY FACTOR IN PREVENTING THIS CRISIS. WE HAVE TO EXPAND THE REGULATION TO ENTITIES WHICH WERE UNTIL NOW, WERE OUT OF THE SUPERVISION AND WE HAVE TO REDUCE THE CONFLICT OF INTERESTS, FOR INSTANCE, WHEN WE THINK ABOUT RATING AGENCY OR INSTITUTION LIKE THIS ONE. THAT'S SPECIAL FEELING WHAT I HAD IN MIND WHEN I SAY THE IMF IS NOT CONCERNED ABOUT EVERYTHING. OF COURSE, REGULATORS ARE MEETING IN FORMER SSS FINANCIAL, AND BECOMING THE SSB AND WITH PART OF IT, WE HAVE INPUT AND IT'S NOT REALLY OUR JOB TO MAKE THE REGULATION. TO KNOW WHAT IS SOUND FOR THE BANK IS TO HAVE X PERCENT OF ITS CAPITAL NOT EXCEED THIS PART IN LENDING. THAT'S REGULATION OF THE BANKING SYSTEM. THAT'S NOT OUR JOB. OUR JOB IS DOWN THE ROAD. WHEN THIS HAS BEEN IMPLEMENTS THEN WE CAN CAN, FOR THE CIVILIANS, AND WE CAN ASSESS IF THE IMPLEMENTATION HAS BEEN DONE CORRECTLY BUT THE REGULATION ITSELF IS NOT OUR JOB. THE SECOND IS ONE OF CIVILIANS. THIS IS A VERY IMPORTANT PART OF THE IMF'S WORK AND ESPECIALLY BECAUSE THIS CRISIS IS THE FIRST CRISIS, PROBABLY NOT THE LAST ONE, BEING MAINLY A CRISIS OF THE LINKAGES AND THE REAL ECONOMY. THE CENTRAL BANKS ARE WORKING, TOO, BUT ONLY ONE AT THE CORNER OF MAIN STREET AND WALL STREET THAT'S WORKING ON THE LINKAGES AND THAT'S WHY THE CIVILIANS IN THE IMF WILL BECOME MORE IMPORTANT IN THE COMING YEARS. THAT HAS BEEN STRESSED BY THE G-20. OF COURSE CIVILIANS IS USEFUL IF YOU GIVE EARLY WARNINGS AND WE HAVE BEEN CRITICIZED, RIGHTLY, IN NOT BEING ABLE TO NOT ONLY TO AVOID THE CRISIS BUT TO WARN EARLY ENOUGH. IT'S PARTLY TRUE AND PARTLY UNFAIR. PARTLY TRUE BECAUSE, WELL, LET'S DO IT THE OTHER WAY AROUND. IT'S PARTLY UNFAIR BECAUSE WE GAVE WARNING. BUT WHEN THE SKY IS BLUE, YOU GO TO POLICYMAKERS AND SAY, LISTEN, NEXT YEAR MAY BE VERY DIFFICULT, THEY DON'T WANT TO LISTEN TOO MUCH. THEY HAVE ELECTIONS AND OTHER AGENDAS. SO WE WARN. CERTAINLY NOT LOUDLY ENOUGH AND OUR WARNINGS WERE NOT LISTENED TO ENOUGH. ON THE OTHER HAND IT'S TRUE TO SAY THAT SOON ENOUGH AND STRONGLY ENOUGH, THAT WE DIDN'T HAVE THE TOOL TO ANALYZE THE SITUATION WELL ENOUGH. SO ONE OF THE BIG IMPROVEMENTS FOR THE COMING TIME IS TO CREATE THIS EARLY-WARNING SYSTEM IN A MUCH MORE EFFECTIVE WAY. AND THAT ALSO IS SOMETHING THAT HAS BEEN RECENTLY ASKED AND STRONG BY BY ALL LEADERS OF THE IMF. THE IMF HAD TO CHANGE AND ADOPT TO THIS CRISIS, BECAUSE THERE CRISIS HAS A NEW KIND OF COUNTRY. USUALLY WHEN THE IMF WAS ASKED TO WORK WITH THE COUNTRIES BECAUSE THE COUNTRY WAS IN DEEP TROUBLE IT WAS MAINLY BECAUSE OF ITS OWN POLICY. THE SITUATION IS NEW IS THAT YOU STILL HAVE THIS KIND OF COUNTRY BUT OTHER COUNTRIES HAVE THE RIGHT POLICY IN PLACE. NOTHING TO CHANGE. BUT JUST BECAUSE OF THE GLOBAL CRISIS AND THAT'S, THE EXAMPLE OF MEXICO AND POLAND, TWO COUNTRIES USING THE NEW FACILITY THAT WE ESTABLISHED A FEW WEEKS AGO, FOR A COUNTRY WITH A GOOD TRACK RECORD WHERE THE TRADITION WILL NOT APPLY BECAUSE WE DON'T WANT THEM TO CHANGE THE POLICY BUT NEVERTHELESS THEY HAVE TROUBLES BECAUSE OF THE GLOBAL SLOWDOWN. SO WE HAVE TO CREATE A NEW FACILITY ADAPTED TO THIS COUNTRY, AND AT THE SAME TIME TO STREAMLINE THE CONDITIONALITY THAT WE USE FOR OTHER COUNTRIES BECAUSE IN THE PAST, MANY TIMES WHEN THE IMF HAD TO DEAL WITH THE COUNTRY, THE CONDITION THAT IMF IMPOSED WERE NOT ONLY LINKED TO THE PROBLEMS BUT ALSO TRYING TO SOLVE OTHER PROBLEMS OF THE COUNTRY NOT DIRECTLY AT STAKE IN THE CRISIS FOR WHICH THE IMF HAS BEEN ASKED TO COME. FOR INSTANCE, WHEN YOU HAVE A PAYMENT CRISIS YOU MAY HAVE VERY GOOD REASON TO EXPLAIN THAT THEY SHOULD HAVE A LAND REFORM, WHICH WOULD BE VERY GOOD FOR THE COUNTRY BUT HAS NOTHING TO DO OR VERY LITTLE TO DO WITH THE CRISIS AT STAKE. SO THE CONDITIONALITY OF THE IMF WAS TOO LARGE, CREATING A LOT OF POLITICAL PROBLEMS AT AND THE STIGMA OF ASKING THE IMF TO WORK WITH YOU. RECENTLY IN MOST OF THE COUNTRIES WHERE WE HAVE PROGRAMS NOW, HUNGARY AND UKRAINE AND PAKISTAN AND OTHERS, WE TRY TO STREAMLINE THIS CONDITION TO WHAT IS ABSOLUTELY NEEDED FOR THE -- TO FIX THE PROBLEM. AT THE SAME TIME WE TRY TO DEVELOP WHAT I CALL "SOCIAL CONDITIONALITY" WHICH IS TO TAKE INTO ACCOUNT THE MOST VULNERABLE PART OF THE POPULATION AND AVOID THIS SO THEY DON'T SUFFER FROM THE ADJUSTMENT. WHICH IS ALSO SOMETHING WHICH RATHER NEW. AND THE LAST POINT, AND I WILL COME TO THE END, IS THE QUESTION OF COOPERATION. AS I SAID BEFORE, THE EXAMPLE OF THE STIMULUS IS A VERY GOOD EXAMPLE OF A HUGE CORPORATION AT THE GLOBAL LEVEL BUT IT WOULD CERTAINLY ARE ABLE TO DO MORE. WE SEE THE BENEFIT OF THE COOPERATION IN THE STIMULUS. WE ALSO SOW THE BENEFIT OF THIS WHEN BANKS PROVIDE LIQUIDITY TO THE MARKET. AFTER THE LEEMAN EPISODE AND THE CLIMAX OF THE CRISIS, SO IT HAS BEEN SHOWN TWICE. FEDERAL BANKS WITH LIQUIDITY. STIMULUS WITH THE IMF. THAT'S WHY INTERNATIONAL COOPERATION WAS THE ONLY WAY TO DEAL WITH THIS KIND OF CRISIS AND SINCE IT IS A GLOBAL PROBLEM THE QUESTION IS WHAT'S THE RIGHT PLACE TO ORGANIZE THIS. I I BELIEVE THAT THE IMF IS THE STRUCK SURE TO DO IT. ONE IS HAVING THE MEMBERS DOING IT AND THAT'S PROBABLY INCREASING THE -- THE G-20 ASKED THE IMF TO SPEED UP THE PROCESS OF OF REFORMING THE QUOTA SYSTEM, WHICH IS A VERY DIFFICULT STORY REFLECTING THE SIZE AND SHARE AND VOICE OF THE DIFFERENT COUNTRIES IN THE IMF TO ENHANCE THE VOICE OF EEMERGING COUNTRIES SO THE LEGITIMACY OF INSTITUTION WILL BETTER REFLECT THE STATE OF THE WORLD. SO THAT'S THE MAIN MESSAGES. I THINK WE ARE AT A POINT WHERE MEETING IN LONDON HAS BEEN A BIG SUCCESS AND WE MAY BE AT A TURNING POINT. I SAY "MAYBE" BECAUSE THE FORCES ARE PUSHING DOWNWARDS. ESPECIALLY SINCE THE END OF 2008 WAS A BAD YEAR. SO THE FACT IS THE BAD END OF 2008 IS STILL AT WORK. AND ANOTHER WAY, ANOTHER TIME, WE CAN LOOK AT SOME GLIMMERS OF HOPE AS PRESIDENT OBAMA SAID. AND IT'S TRUE TO SAY IF THERE ARE RED LIGHTS AND GREEN LIGHTS. WE MAY BE AT A TURNING POINT. DEPENDING ON -- DEPENDING ON THE RIGHT POLICY BEING IMPLEMENTED. I'LL SAY THAT I WAS SATISFIED BY WHAT IS DONE WITH THE STIMULUS AND STILL CONCERNED ABOUT WHAT IS DONE IN TERMS OF CLEANSING OF THE FINANCIAL SECTOR. I WON'T SAY NOTHING HAS BEEN DONE BECAUSE THAT WOULD BE UNFAIR BUT OBVIOUSLY IT DOESN'T GO FAST ENOUGH. SO IT'S TIME TO MOVE FORWARD AND IF WE DO MOVE FORWARD IN THE CORRECT WAY THEN THE RECOVERY OF THE GLOBAL ECONOMY IN THE FIRST HALF OF 2010 WILL BE A CORRECT FORECAST. SO IT GIVES TO THE IMF GREATER SENSE OF STABILITY AND I HOPE WE CAN LIVE UP TO IT. I'M CONVINCED THAT PART OF THE SUCCESS OF THE RECOVERY AND PART OF THE HEALTH OF THE WORLD ECONOMY DEPENDS ON IT. SO THANK YOU VERY MUCH FOR HAVING LISTENED TO MY REMARKS AND, OF COURSE, I'M PREPARED TO ANSWER ALL QUESTIONS YOU WOULD LIKE TO ASK.
00:22:13	>>	OKAY. HOW CONFIDENT ARE YOU THAT THE G-20 NATION ALSO COME THROUGH WITH THE MONEY THEY HAVE PLEDGED? WILL THE U.S. DELIVER AT LEAST $100 BILLION?
00:22:25	>>	I'M TOTALLY CONFIDENT. THE PLEDGES ARE FOR $500 BILLION. THAT'S SMALL MONEY. OUR RESOURCES TODAY ARE 250 AND THIS 500 WILL BE THE TRIPLING EVERYBODY HAS BEEN TALKING ABOUT. WE ALREADY HAVE THE 100 FROM IF JAPANESE AND WE HAVE A COMMITMENT WHICH IS JUST BEING ORGANIZED IN AN AGREEMENT WITH THE EUROPEANS. IT TAKES A LITTLE TIME TO MAKE IT AS IT HAS TAKEN SOME TIME FOR THE JAPANESE. THE JAPANESE PLEDGED IN OCTOBER AND WE SIGNED THE AGREEMENT IN FEBRUARY SO WE'RE IN THE PROCESS WITH THE EUROPEANS. AS YOU SAY, THE AMERICANS SAY, UP TO $100 BILLION. I CAN'T SAY WHAT I BELIEVE BECAUSE WE'RE IN PRIVATE MEETINGS. BUT I DON'T SEE THE U.S. DOING LESS THAN THE JAPANESE AND EUROPEANS SO IT WILL BE SOMETHING LIKE 100 BILLION OR 300 BILLION AND THE CHINESE PLEJDS SOMETHING CLOSE TO 40 OR 50 BILLION. WE HAVE 10 BILLION COMING FROM SWITZERLAND AND FIVE FROM NORWAY AND ALL TOGETHER IT LOOKS LIKE $400 BILLION. BUT THERE ARE OTHER COUNTRIES THAT ARE SAYING THEY WILL PROVIDE RESOURCES AND THEN THEY DIDN'T DO IT. PRONOUNCE A FIGURE ALREADY LIKE THE SAUDIS FOR INSTANCE, AND THE COUNTRIES WITH THE RUSSIAN AND BRAZILIANS HAVE COMMITTED THEMSELVES TO A COUPLE OF BILLION. SO ABSOLUTELY I'M CONFIDENT THAT BY THE END OF THIS YEAR ALL OF THIS TAKES TIME TO BE PUT ON THE PAPER AND SIGNED. BUT OUT OF THIS YEAR, THE 500 BILLION WILL BE COMPLETED.
00:24:27	>>	THE U.S. IS FACING STAGGERING DEBT. HOW CAN IT AFFORD THIS QUOTA?
00:24:31	>>	THAT'S NOT THE SAME THING. YOU HAVE TO UNDERSTAND WHAT IS THE IMF RESOURCES? THE IMF RESOURCES, 500 BILLION WE'RE TALKING ABOUT IS AN AGREEMENT TO BORROW. THAT MEANS IF WE NEED IT WE WILL ASK THE COUNTRY TO PROVIDE IT. WHO PROVIDES IT? THE CENTRAL BANKS. SO IT'S A SWAP AGREEMENT AS IF THE IMF WAS A CENTRAL BANK AND WE JUST CHANGE AN AGREEMENT WITH LOAN DOCUMENT TO THE COUNTRIES AND THEY WILL PROVIDE US WITH THE MONEY. THIS DOESN'T COME FROM TAXPAYER. IF IT HAD TO COME FROM TAXPAYER THAT WOULD BE ANOTHER STORY. BUT THAT'S NOT AT ALL THE CASE. AND IT'S EXACTLY THE SAME THING AS WHEN THE FED AND ECB OR THE FED AND BANK OF ENGLAND STRUCK AN AGREEMENT TO SFIET AGAINST SPECULATION. SO THE MONEY THAT COMES FROM THE MONETARY SIDE AND NOT THE FISCAL SIDE. AND THAT'S WHY IT'S NOT DIFFICULT TO ACHIEVE.
00:25:30	>>	WILL THE U.S. DOLLAR CONTINUE TO BE THE WORLD'S TOP INTERNATIONAL CURRENCY, IF NOT, WHAT WILL REPLACE IT AND WHEN?
00:25:40	>>	IF I KNEW I WOULD BE A RICH MAN. WELL, I SEE NO REASON WHY FOR A VERY LONG PERIOD OF TIMETIME -- I DON'T KNOW WHAT WILL HAPPEN IN 40 OR 50 YEARS -- BUT I DON'T SEE WHY THE U.S. DOLLAR WOULDN'T CONTINUE TO BE THE MAIN CURRENCY. THE YEN HAS ITS OWN PART. THE EURO IS CHALLENGING. THERE ARE MANY REASONS TO BELIEVE THAT WHEN THE CRISIS IS OVER WE'LL STILL HAVE A SYSTEM WHERE THE ROLE OF THE U.S. DOLLAR WILL BE ALMOST THE SAME. THAT'S NOT SURPRISING, BUT WHAT IS SURPRISING IS THAT THE DOLLAR BEHAVES SO WELL IN THE CURRENT CRISIS. IF YOU PUT IN THE SAME RULE TWO YEARS AGO, AND TELL THEM, WE'RE GOING TO HAVE THIS KIND OF CRISIS. THIS WAS A BIG AMOUNT OF TOXIC ASSET AND SUCH A BIG SLOWDOWN IN THE WORLD ECONOMY, ORIGINATED IN THE UNITED STATES. WHAT HAPPENED? AND IF THE QUESTION WAS ASKED, WHAT WILL BE THE CONSEQUENCE OF THE DOLLAR? PROBABLY MOST WILL SAY, IT WILL BE A COLLAPSE OF THE DOLLAR AND THAT'S WHAT HAPPENED. THE DOLLAR TODAY IS MUCH HIGHER COMPARED TO THE EURO, FOR INSTANCE, THAN IT WAS ONE YEAR AGO. SO IT SHOWS THAT IN TROUBLED TIMES, PEOPLE DO BELIEVE IN THE FUTURE OF THE U.S. ECONOMY. DO BELIEVE IN THE FACT THAT FINALLY, EVERYTHING IS BAD BUT THE U.S. IS NOT THE WORST. AND FINALLY, THE DOLLARS ARE PROBABLY NOT THE CHOICE TO MAKE. SO I HAVE NO REASON TO BELIEVE THAT, AGAIN, IN THE FORESEEABLE TIME, TEN YEARS OR SO, THERE WILL BE ANY KIND OF CHANGE ON THIS BALANCE OF POWER BETWEEN THE CURRENCIES.
00:27:30	>>	YOU SAID MORE STIMULUS MONEY MIGHT BE NEEDED. DO YOU THINK THE U.S. NEEDS TO PROVIDE MORE STIMULUS MONEY? AND IF SO, HOW MUCH?
00:27:41	>>	WELL, I DIDN'T SAY IT WILL BE NEEDED. I SAID WHAT HAS BEEN DONE FOR 2009 IS FINE. MOST OF THE STIMULUS PLAN DO HAVE A COVENANT FOR 2007 WITH THE COVENANT FOR 2007 BE BIG ENOUGH? WE'LL SEE. IT DEPENDS ON THE EFFECTIVENESS OF 2009. AND THE EFFECTIVENESS OF 2009 IS NOT ONLY THE STIMULUS PLAN BUT ALSO THE WAY THE FINANCIAL SECTOR WILL BE CLEANED UP. YOU KNOW, THE EFFECTIVENESS OF THE STIMULUS CAN GO FROM ONE TO TWO, DEPENDING ON WHAT HAPPENED IN THE BANKING SECTOR. YOU HAVE MET, AS I DID, A LOT OF PEOPLE IN THE STREET SAYING I DON'T UNDERSTAND THIS. SO MANY BILLIONS OF THE T.A.R.P., YOU TOOK THIS HUGE AMOUNT OF MONEY AND NOW WHEN I GO TO MY BANK AND ASK FOR A LITTLE MONEY FOR MY BUSINESS, THEY SAY "WE HAVE NO MONEY." THE PROBLEM IS THAT THE SYSTEM IS FROZEN AND THE CREDIT IS STILL FROZEN. STILL, IT'S FROZEN. THE EFFECTIVENESS OF THE STIMULUS ITSELF WILL RELY ON THE WAY THIS WILL DECREASE AND DEPENDING ON THAT, THE NEED FOR 2007 WILL BE TOTALLY DIFFERENT SO IT'S IMPOSSIBLE TODAY TO SAY WE'LL NEED MORE STIMULUS. THE ONLY THING THAT'S IMPORTANT IS THE COMMITMENT BY IF HEAD OF STATEMENT OF GOVERNMENT IN LONDON THAT IF NEEDED, THEY WILL PROVIDE SOMETHING. BUT I HOPE IT WILL NOT BE NEEDED BECAUSE WHAT HAS BEEN DONE AND IF WE SPEED UP THE CLEANSING OF THE FINANCIAL SECTOR, WHAT HAS BEEN DONE WILL BE ENOUGH.
00:29:27	>>	HOW DO THE OBAMA ADMINISTRATION POLICY TOWARDS THE IMF DIFFER FROM THE BUSH ADMINISTRATION?
00:29:43	>>	WELL, I WORKED DURING ONE YEAR, A LITTLE MORE, WITH WITH TEAM AND I THINK WE WORKED VERY WELL -- IT WASN'T ALWAYS EASY AND I WON'T SAY THE TREASURY ALWAYS AGREED WITH WHAT THE IMF IS SAYING AND THAT'S ABSOLUTELY NORMAL -- BUT THE RELATIONSHIP, CONFIDENCE WERE FINE AND I THINK WE TRIED TO DO THE BEST JOB WE COULD PROVIDING THE U.S. AND OTHER COUNTRIES WITH POLICY ADVICE. ASKING FOR SPEEDING UP THE STIMULUS PROCESS AND EVERYTHING ELSE WHAT BEEN DONE CORRECTLY. THEN THE NEW ADMINISTRATION IS NOW IN PLACE FOR A COUPLE OF WEEKS AND IT HAPPENS THAT THERE ARE FRIENDS THERE AND, FOR INSTANCE, LARRY SUMMERS WAS A DEPUTY SECRETARY OF THE TREASURY AND THEN THE SECRETARY OF TREASURY SO WE HAD SOME LINKS FROM THE PAST. SO IN TERMS OF PERSONAL RELATIONSHIPS, THINGS MAY BE EASIER. SAME THING FOR TIM GEITHNER WHO WAS ALSO AT THIS TIME IN THE TREASURY AND SO I KNEW HIM FOR A LONG TIME. SO I KNOW THIS TEAM FOR A LONG TIME. I DIDN'T KNOW THE MEMBER OF THE PREVIOUS TEAM FOR SUCH A LONG TIME BUT IN BOTH CASES I THINK THE U.S. IS PLAYING THE PERFECT ROLE AS THE MAIN SHAREHOLDER OF THE IMF. HAVING HIS VOICE AS A MAIN SHAREHOLDER BUT ALSO UNDERSTANDING THAT WE'RE IN A MULTILATERAL SYSTEM, WHERE THE VOICE OF EVERYBODY HAS TO BE LISTENED TO.
00:31:21	>>	WHAT HAS DRIVEN YOU TO SOFTEN THE CONDITIONS YOU ATTACH TO AID AND IS THERE A RISK THAT YOU SWING TOO FAR TOWARDS NOT IMPOSING ENOUGH CONDITIONS AND COUNTRIES TAKE THE CASH WITHOUT MAKING NECESSARY REFORMS?
00:31:35	>>	THAT'S THE GENERAL PROBLEM. WHEN WE HELP A COUNTRY, AS I TOLD YOU BEFORE, WE MAKE REFORM. THE GENERAL CASE, TRADITIONAL CASE, IS THAT A COUNTRY COMES TO THE IMF BECAUSE THEY'RE IN A MESS. THEY HAVE A MESS BECAUSE THEY HAD THE WRONG POLICY IN PLACE. THE WRONG POLICY, OFTEN, NOT ALWAYS, HAS TO DO WITH FISCAL BECAUSE THEY SPENT TOO MUCH. THAT'S WHY THE IMF HAS A BAD REPUTATION BECAUSE WE ALWAYS SAY SPEND LESS. AND THAT'S ALWAYS DIFFICULT. AND THAT'S WHY THE GOVERNMENT, WHEN IT HAS TO IMPLEMENT THIS KIND OF POLICY SAYS ITS OWN CITIZENS THAT THE IMF IS ASKING THAT AND PEOPLE DON'T LIKE THAT. AND THAT'S PART OF OUR WORK. WHAT IS DIFFERENT? WHAT IS NEW? FOR SOME COUNTRIES, AS I SAID BEFORE, WE DON'T ASK THEM -- WE WON'T ASK THEM ANYTHING TO CHANGE BECAUSE THEY HAVE THE RIGHT POLICY AND IT'S NOT THEIR FAULT IF THEY ARE IN A DIFFICULT SITUATION. SO THERE'S NO RISK THAT THEY WON'T IMPLEMENT THE CONNECT CONDITION BECAUSE THEY ARE ALREADY HAVING THE RIGHT POLICY. YOU MIGHT IMAGINE THAT IN SUCH A COUNTRY, THE ELECTION, A TOTALLY DIFFERENT GOVERNMENT COMES IN AND IT HAS A TOTALLY DIFFERENT POLICY. EVERYTHING IS POSSIBLE. BUT IF YOU LOOK AT WHAT IS REASONABLE, THEN AT LEAST IN THE TWO COUNTRIES WHICH ARE NOW CONCERNED WITH THIS NEW FACILITY -- MEXICO AND POLAND -- THEY'LL GO ON WITH THE POLICY THEY HAD IN PLACE AND NOT ASK MORE THAN THAT. JUST DO WHAT YOU DID BEFORE, WHICH IS CORRECT. BUT WE HAVE TO HELP YOU BECAUSE THE CAPITAL THAT YOU USED HAVE DISAPPEARED BECAUSE OF REPATRIATION OF CAPITAL BY AMERICAN-EUROPEAN BANKS. SO YOU ARE JUST FACING A FINANCING GAP AND WE'RE HELPING YOU TO BRIDGE THE GAP. BUT WE DON'T ASK YOU TO CHANGE YOUR POLICIES. SO THERE'S NO REAL RISK THAT THEY WON'T IMPLEMENT THE REFORM WE ASK. WE DON'T ASK THEM TO CHANGE THEIR POLICY.
00:33:37	>>	CAN YOU GIVE US AN UPDATE ON IMF'S DEBT ISSUING? HOW MUCH WILL CHINA PURCHASE?
00:33:49	>>	BETTER ASK THE CHINESE. FIRST, IT'S SOMETHING TOTALLY NEW WHICH WAS FOR, SINCE THE BEGINNING, FOR 60 YEARS AND ARTICLE OF AGREEMENTS, THAT THEY COULD ISSUE BONDS TO BE DIRECTLY BORROWED BY A MEMBER. BUT IT HAS NEVER BEEN DONE. SO IT'S SOMETHING TOTALLY NEW, EVEN IF IT WAS SOMETHING WHICH WAS ALREADY DEFINED 60 YEARS AGO. WE'RE PROBABLY GOING TO USE THIS NEW WAY FOR CHINA AND MAYBE FOR OTHERS, BECAUSE SOME COUNTRIES PREFER THIS WAY RATHER THAN HAVE TRADITIONAL BY LATERAL AGREEMENT OF A LOAN TO BUY OUR BONDS. SO WE'RE GOING TO DO THAT. HOW MUCH ARE THEY GOING TO BUY? I TOLD YOU BEFORE I THINK IT WILL BE SOMETHING AROUND $40 BILLION OR MAYBE A LITTLE MORE. I DON'T KNOW. WE'RE JUST IN THE PROCESS OF DEFINING THIS NEW KIND OF BONDS WHICH WILL BE BONDS IN THE IMF CURRENCY AND AS SOON AS THOSE BONDS WILL BE CREATED WHICH IS A QUESTION OF DAYS BUT IT'S NEVER BEEN DONE BEFORE AS I TOLD YOU. SO ADMINISTRATIVE AND TECHNICAL WORK TO DO. HOW MUCH IS A BIT DIFFICULT TO SAY BECAUSE IT WILL BE SOMETHING THEY CAN BUY AND SELL SO ONE DAY THEY CAN BUY MORE AND A FEW MONTHS LATER THEY CAN BUY EVEN MORE. IT'S NOT AS IF YOU HAVE A SPECIFIC AGREEMENT WHICH WAS DEFINED AS X BILLION DOLLARS AND THAT'S IT. IF YOU WANT TO DO MORE YOU HAVE TO CREATE A NEW AGREEMENT. WHEN YOU USE THIS NEW KIND OF BOND, THAT'S PROBABLY ONE OF THE REASONS THE COUNTRIES ARE INTERESTED IN IT, I HAD MUCH MORE FLEXIBLE SO THE AMOUNT MAY MOVE OVER TIME.
00:35:44	>>	LATIN AMERICA IS ONE OF THE REGION'S MOST EFFECTED BY THIS STOCK OF FOREIGN CAPITAL. HOW CONCERNED ARE YOU ABOUT THE SITUATION IN THE REGION AND DO YOU EXPECT MORE COUNTRIES IN THE REGION TO REQUEST IMF LOANS?
00:35:58	>>	I DON'T REMEMBER -- I SAY THAT LATIN AMERICA WAS THE PART OF THE WORLD MOST EFFECTED BY THIS SUDDEN STOP OF CAPITAL INFLOWS. AND IF I HAD TO MAKE A BET I WOULD SAY CENTRAL EUROPE HAS BEEN MORE EFFECTED BY THIS. BUT NEVERTHELESS YOUR QUESTION IS ABOUT LATIN AMERICA. MANY LATIN AMERICAN COUNTRIES HAVE SUFFERED AND THAT'S WHY SOME NEED SOME SUPPORT. WE ALREADY GAVE SOME SUPPORT TO SMALLER COUNTRIES, COSTA RICA AND WE NEED TO DEAL WITH MEXICO AND THAT WILL HAPPEN IN THE COMING WEEKS. BUT SURPRISINGLY ENOUGH -- IT'S NOT SURPRISING WHEN YOU REALLY ANALYZE IT -- BUT AT FIRST GLANCE, SURPRISINGLY ENOUGH, LATIN AMERICA IS RATHER RESILIENT TO THE CRISIS, MORE THAN OTHER PARTS OF THE WORLD AND MORE THAN CENTRAL EUROPE. SO I'M NOT SAYING THAT IT'S NO PROBLEM IN LATIN AMERICA. THAT WOULD BE TOTALLY WRONG. BUT THEY'RE NOT IN SUCH BAD SHAPE. FOR INSTANCE, COUNTRIES LIKE BRAZIL WILL PROBABLY HAVE THIS YEAR A VERY, VERY LITTLE, WILL HAVE A FLEG TIVE GROWTH RATE. BUT NEVERTHELESS, IT'S IN THE PAST AND IT'S IN GOOD RESERVE AND THEY HAVE GOOD POLICY IN PLACE. THEY ARE LESS AFFECTED BY THE CRISIS THAN THE U.S. OR SOME EUROPEAN COUNTRIES WHICH IS NOT TO SAY THEY AREN'T EFFECTED AT ALL. OF COURSE NOT. BUT THEY ARE FACING THE CRISIS RATHER WELL. AND BRAZIL IS, OF COURSE, A HUGE PART OF THE LATIN AMERICAN ECONOMY. SO THERE MAY BE OTHER COUNTRIES FROM LATIN AMERICA COMING TO THE FRONT AND ASKING FOR HELP, BUT I DON'T SEE LATIN AMERICA THESE DAYS AS BEINGHE MOST CONCERNRN THEOSOSTIFFICUCULT PART O OF THE WORLD TO FACE THIS CRISIS.
00:38:07	>>	IT WAS REPORTED THAT IMF ALREADY REACHED AN AGREEMENT FOR A LOAN WITH ROMANIA -- SPEAKING OF CENTRAL EUROPE -- HOW IS THIS DIFFERENT FROM PREVIOUSLY CRITICIZE ADD AGREEMENT AND WHAT ARE THE BUDGET AND POLICY RESTRICTIONS?
00:38:22	>>	ROMANIA, THE AGREEMENT THAT WAS MADE A FEW DAYS AGO, BUT I COULD SAY THE SAME THING FOR OTHERS LIKE HUNGARY OR THE UKRAINE IN THE SAME REGION -- BUT WHAT IS DIFFERENT? THE DIFFERENCE IS, AS I SAID BEFORE, WE FOCUS ON WHAT IS WE CALL CORE CONDITIONING. WHICH IS THOSE COUNTRIES HAVE PROBLEMS FACING THE CRISIS AND THE PROBLEM IS MAINLY DEBT. THEIR CAPITAL INTHROWS HAVE DRIED UP. THEY MAY HAVE SOME OTHER INTERNAL PROBLEMS, BUT MAINLY THE PROBLEM COMES FROM THE CRISIS SO WE HAVE TO FIX THIS TO HELP THEM TO BRIDGE THE GAP AND DO THAT UNTIL THE ECONOMY RECOVERS. SO THE FIRST DIFFERENCE IS THIS ONE. NOT -- I ASKED MY TEAM NOT TO DO -- THEY WANTED IN THE PAST TO FIX THE WORLD AND FIX ALL THE PROBLEMS -- TRYING TO REDUCE AND STREAMLINE THE CONDITIONALITY TO WHAT IS NEEDED TO FIX THE PROBLEM AT THIS TIME IN THIS COUNTRY. AND THE SECOND THING THAT'S DIFFERENT FROM THIS HEAVILY CRITICIZED PROGRAM IN THE PAST, SOMETIMES IN AN UNFAIR WAY. BUT I WILL MAKE A COMMENT AFTER THIS, IF YOU WANT. IS THAT AS I SAID, ALSO, A FEW MINUTES AGO, WE TRY TO PROTECT THE MOST VULNERABLE. SO TAKE, FOR EXAMPLE, IN HUNGARY OR PAKISTAN, WE LOOK WITH THE GOVERNMENT AND WHAT WILL BE THE RIGHT PATH TO REDUCE THE FISCAL DEFICIT AND THEN WE SAY, OKAY. YOU WILL HAVE A LITTLE MORE DEFICIT. 0 .3 OR 0.5 AND YOU WILL USE IT TO FACE THE PROBLEM OF THE MOST VULNERABLE. WHY? NOT ONLY FOR ETHICAL REASONS BUT SUDDENLY, THE IMF WILL CHANGE TO A CHARITY ORGANIZATION, BUT BECAUSE I BELIEVE THAT THE OWNERSHIP OF THE PROGRAM IN MY COUNTRY IS ONE OF THE CONDITIONS OF SUCCESS. AND WHEN THE PROGRAM IS TOTALLY REJECTED BY A COUNTRY, WHICH MEANS THE IMAGE AND TRADITION FOR THE PROGRAM, THE CHANGE TO SUCCESS ARE VERY MUCH REDUCED. SO TO HAVE THE PROGRAM ACCEPTED BY A COUNTRY, WHICH IS ALWAYS DIFFICULT PROGRAM WHEN YOU NEED TO ADJUST, TO TAKE CARE OF THE POOREST PART OF THE POPULATION WHICH IS GENERALLY THE ONE THAT'S THE MOST HIT BY THE ADJUSTMENT, IS ABSOLUTELY NECESSARY. THAT'S WHAT WE DID IN ALL OF THE COUNTRY INCLUDING ROMANIA. AND I DO BELIEVE THAT IT APPEARS TO THE IMF PROGRAM A TOTALLY DIFFERENT MEANS AND PERCEPTION BY THE POPULATION THAT IT WAS IN THE PAST. THAT'S WHAT WE ALREADY FEEL, WHETHER WE READ THE NEWSPAPERS IN THOSE COUNTRIES OR WHEN WE DISCUSS WITH PEOPLE IN THIS COUNTRY, THE IMPRESSION GIVEN BY THE IMF PROGRAM IS -- I WON'T SAY THEY'RE HAPPY TO HAVE THIS PROGRAM WITH THE IMF BECAUSE THEY MEANS THEY HAVE PROBLEMS -- BUT THE IMPRESSION IS MORE THAN SLIGHTLY SIGNIFICANTLY DIFFERENT FROM THE IMPRESSION THEY HAD BEFORE.
00:41:33	>>	DUE TO THE SEVERITY OF THIS CRISIS, DO YOU SEE AFRICAN ECONOMIC POWER HOUSES SUCH AS SOUTH AFRICA, NIGERIA AND EGYPT SLIDING INTO RECESSION THIS YEAR? AND WHAT WOULD BE THE IMPLICATIONS FOR THE CONFIDENCE?
00:41:53	>>	WELL, AS I TOLD YOU, THE SITUATION IN AFRICA IS A BIT SPECIAL. WHY? BECAUSE DURING THE LAST DECADE, AFRICAN COUNTRIES EVENTUALLY FOLLOWED THE FRAMEWORK FOR ECONOMIC POLICY AND CLEARLY THROUGH THE WESTERN AFRICA AND A VERY GOOD EXAMPLE IN EAST AFRICA. AND THE RESULT OF THAT WAS THEY EXPERIENCED SEVERAL YEARS -- FIVE, SIX, SEVEN YEARS IN A ROW -- OF VERY HIGH GROWTH. FIVE OR SIX PERCENT FROM THE PAST. SO THE PROBLEM TODAY IS THAT THE RISK IS NOT ONLY AN HUMANITARIAN RISK -- BECAUSE IN THOSE COUNTRIES A SLOWDOWN IN THE ECONOMY IS NOT ONLY LOSING ONE OR TWO POINTS OF PURCHASING POWER OR HAVING AN INCREASE IN EMPLOYMENT -- IT'S MORE THAN THAT. IT'S A QUESTION OF LIFE AND DEATH FOR A LOT OF PEOPLE. BUT BEYOND THAT, WHAT IS ALSO AT STAKE IS THE RISK THAT THE SLOWDOWN IN THE ECONOMY EVOLVES IN SOCIAL UNREST AND FROM SOCIAL UNREST THE THREAT TO DEMOCRACY. SO DEMOCRACY IS A VERY YOUNG DEMOCRACY AND THE UNREST IS REALLY LIKELY TO DESTABILIZE IT WITH CONSEQUENCES BEYOND DEMOCRACY, A WAR, CIVIL WAR OR INTERNATIONAL WAR. SO I DON'T WANT TO MAKE TOO GLOOMY OF A PICTURE BUT THAT'S REALLY WHAT IS AT STAKE. SO IN THIS ENVIRONMENT YOU HAVE THREE BIG ECONOMIES YOU MENTIONED. SOUTH AFRICA, NIGERIA AND EGYPT. THEY ARE ALL DIFFERENT. SOUTH AFRICA IS VERY DIVERSIFIED ECONOMY. NIGERIA IS CENTERED ON PRODUCING MOSTLY -- MOSTLY CENTERED ON PRODUCING OIL. AND EGYPT ECONOMY IS A VERY DIFFERENT KIND OF MEDITERRANEAN ECONOMY. BUT THE RISK FOR THESE THREE ECONOMIES ARE BIG. THEY ARE DIFFERENT FROM OTHER COUNTRIES BECAUSE THEY'RE BIGGER AND RICHER THAN MANY OTHER COUNTRIES ON THE CONTINENT. SO THE RISK OF DESTABLIZATION I WAS JUST TALKING ABOUT, DO NOT CONCERN THESE THREE COUNTRIES. BUT THE RISK OF HAVING THOSE COUNTRIES SLOWING DOWN RAPIDOUSLY A REAL RISK, EVEN FAR A COUNTRY LIKE NIGERIA WHEN THE PRICE OF OIL IS TODAY, SO LOW. THE RISK OF GOING INTO MAYBE NOT A NEGATIVE TERRITORY OF GROWTH BUT, AT LEAST SMALL GROWTH RATE, IS A REAL RISK.
00:44:29	>>	WHAT IS THE STATUS OF THE IMF NEGOTIATIONS WITH TURKEY? WHEN DO YOU EXPECT AN AGREEMENT? AND WHAT IS THE FINANCIAL SIZE OF AGREEMENT IN YOUR VIEW?
00:44:52	>>	WELL, WE ARE NEGOTIATING. TURKEY, IN THE PAST, EXPERIENCED A IMPORTANT CAPITAL INFLOW AND THERE HAVE BEEN NEEDS. WE JUST RESUMING NEGOTIATIONS. AND WE HAVE TO POSTPONE IT FOR A TIME BECAUSE THEY HAVE ELECTIONS. ELECTION TIME IS NOT ALWAYS A GOOD TIME FOR GOVERNMENT TO DISCUSS WITH THE IMF SO WE HAVE TO WAIT FOR THE ELECTIONS TO TAKE PLACE IN MARCH. SO AGAIN, I MET WITH THE PRIME MINISTER IN LONDON DURING THE G-20 SUMMIT. I'M CONFIDENT THAT WE CAN FIND AN AGREEMENT RATHER SOON. AND ONLY AT THIS TIME I'LL BE ABLE TO KNOW HOW BIG IS THE AGREEMENT. THIS IS PART OF THE NEGOTIATION AND PART OF THE WORK, ESTIMATING THE REAL NEED FOR THE COMING YEARS. BUT IN MY VIEW, THE TURKISH ECONOMY IS A STRONG ECONOMY AND THEY ARE A BIG ECONOMY. EFFORT HAS BEEN MADE IN THE PAST, WHICH HAVE PRODUCED VERY GOOD RESULTS, AND IMF PROGRAM IS A GOOD RESULT. SO I UNDERSTAND WHY THE GOVERNMENT WANTS TO GO ON WITH A NEW PROGRAM. THE RESULT OF THE PREVIOUS ONE WAS GOOD. OF COURSE, THE COUNTRIES ARE NOT THE SAME BECAUSE OF THE GLOBAL SLOWDOWN SO IT'S A BIT MORE DIFFICULT TO DEFINE THE FRAMEWORK OF THIS PRAP BUT I THINK IN THE COMING WEEKS WE'LL FIND AN AGREEMENT.
00:46:25	>>	WHAT IS YOUR ASSESSMENT OF THE FINANCIAL SITUATION OF AUSTRIA?
00:46:35	>>	WELL, AUSTRIA IS A COUNTRY WHICH HAS BIG BANKS, COMPARED TO THE SIZE OF THE COUNTRY. AND SO THOSE BANKS ARE PARTLY INVESTED IN EASTERN EUROPE. NOT ONLY AUSTRIAN BANKS BUT THE CASE OF MANY OTHER WESTERN EUROPEAN BANKS. IF THINGS BECOME MORE DIFFICULT IN EASTERN EUROPE, THEN NOT ONLY AUSTRIA BUT ITALY, BELGIUM, FRANCE, GERMANY, WILL HAVE PROBLEMS BECAUSE OF THE INVOLVEMENT IN EASTERN EUROPE AND THAT'S WHY EASTERN EUROPE IS SO IMPORTANT AND THAT'S NOT TYPICALLY A PROBLEM THAT WILL BE FOR AUSTRIA AND FOR OTHERS.
00:47:38	>>	WILL THE IMF CONSIDER PROVIDING SHORT-TERM LIQUIDITY LINES OF CREDITS TO COUNTRIES WHICH HAVE PREVIOUSLY DEFAULTED OR REFUSED TO HONOR THEIR UNPAID DEBT OBLIGATION LIKE ECUADOR AND ARGENTINA? ARGENTINA DID REPAY THE MONEY. AND IT'S NOT TRUE TO SAY THAT ARGENTINA DIDN'T PAY WHAT THEY HAD TO PAY TO THE FUND. ECUADOR HAS NO DEBT TO THE FUND. SOME COUNTRIES ARE HAVING TO PAY. ZIMBABWE AND SOME OTHERS -- I'M NOT SURE THE ANSWER IS TO PROVIDE A LIQUID LINE. SO THE PROBLEM IS MORE THEORETICAL PROBLEM THAN A PRACTICAL PROBLEM. OF COURSE THE RECENT MOVE BY THE ECUADORIAN GOVERNMENT FACING FOREIGN DEBT CREATES A SPECIAL PROBLEM AND WE'LL DISCUSS WITH THEM, IF NEEDED, ABOUT THIS. BUT IT'S NOT IMPOSSIBLE FOR THE FUND TO GO ON WITH COUNTRIES EVEN WITH COUNTRIES WHERE WE HAD PROBLEMS IN THE PAST, IF, IN BETWEEN, THE PROBLEMS HAVE BEEN SOLVED AND THE ARREARS ARE PAID, WHICH IS THE CASE FOR 99% OF OUR MEMBERSHIP.
00:48:54	>>	TODAY, THE IMF WARNS THE CURRENT GLOBAL RECESSION IS LIKELY TO BE UNUSUALLY LONG AND SEVERE AND THE RECOVERY SLOW. DO YOU HAVE ANY RECOMMENDATION TO EMERGING COUNTRIES, ESPECIALLY ASIAN COUNTRIES, INCLUDING KOREA?
00:49:11	>>	KOREA IS IN GOOD SHAPE, OF COURSE, AS EVERYBODY TODAY HIT BY THE CRISIS OR THAT'S FACING THIS CRISIS IN A SITUATION LIKE THIS. AND THAT TAKES ME BACK TO THE POINT I MENTIONED PREVIOUSLY WHICH IS, THE FUND HAS BEEN CRITICIZED, ESPECIALLY FOR THE WAY IT HANDLED THE ASIAN CRISIS. FOR REASONS I CAN'T UNDERSTAND AND PROBABLY COULD HAVE BEEN DONE DIFFERENTLY -- IT'S EASY TO SAY IN RETROSPECT -- BUT AT LEAST WE HAVE TO ACKNOWLEDGE THAT WHAT WAS THE MISSION TO FIX THE PROBLEM, TO AVOID BEING CONTAGIOUS TO THE REST OF THE WORLDS AND ALLOW THOSE COUNTRIES TO RECOVER, HAS BEEN DONE. KOREA, INDONESIA, ARE TODAY, THEY HAVE THE RIGHT POLICY IN PLACE. RAPID GROWTH. I'M NOT SAYING, AGAIN, WHAT'S BEEN DONE IN THE PAST COULDN'T HAVE BEEN DONE WITH LESS COST. PROBABLY IT COULD HAVE BEEN DONE WITH LESS COST. BUT THE RESULT TODAY IS IF KOREA IS A VERY STRONG ECONOMY. AS YOU SAY, WE EXPECT THE RECOVERY TO COME THE FIRST HALF OF 2010, BUT IF NOT, AS I EMPHASIZE THE RIGHT POLICY TO BE IMPLEMENTED AND IF NOT, THE CRISIS MAY LAST MUCH LONGER AND THEN IN THIS CASE THERE ARE MANY EMERGING COUNTRIES BUT NOT SO MANY WILL NEED TO HAVE SOME SUPPORT. SO PROBABLY THE BEST ADVICE TODAY IS TO ACKNOWLEDGE THE FACT THAT THERE'S NO DOMESTIC SOLUTION TO THE CRISIS. AND SO THAT WHEN YOU HAVE A GLOBAL CRISIS YOU NEED TO GO ON WITH THE GLOBAL MOVE. PRACTICALLY, IT MEANS THAT IF COUNTRIES ARE BEGINNING TO FACE A PROBLEM, THEY BETTER COME TO THE IMF AND DISCUSS WITH US THAN WAIT FOR THE LAST MINUTE LIKE WHEN YOU'RE SICK AND DON'T WANT TO GO TO THE DOCTOR AND YOU WAIT UNTIL THE LAST MINUTE AND ALWAYS, AS IN THIS CASE, IT'S MORE DIFFICULT TO RECOVER BECAUSE YOU WAIT TOO LONG. THE SAME THING IS TRUE FOR THE ECONOMY OF A COUNTRY. AND WHAT I'M AFRAID OF, IS BECAUSE OF THE SO-CALLED STIGMA AND THE IMF STORY AND THE FACT THAT COUNTRIES DON'T WANT TO COME TO THE IMF BECAUSE IT'S POLITICALLY DIFFERENT, SOME OF THEM WILL WAIT TOO LONG AND THEN, WITH MORE DIFFICULT FOR THEM TO RECOVER. SO THAT'S REALLY THE ADVICE.
00:51:51	>>	THE U.S. HAS DECLINED TO LABEL CHINA A CURRENCY MANIPULATOR. DO YOU AGREE WITH THIS ASSESSMENT? .
00:52:06	>>	THIS IS THAT IT IS I UNDERSTAND VALUED AND THAT THEY HAVE TO RE-EVALUATE. ONE OF THE GOOD THINGS ARE THE PRICES, THERE ARE SOME -- GOOD THING ACT THIS CRISIS, AND THERE ARE SOME -- THE ONE WAY TO DO THIS WAS TO ADVISE THE CHINESE AUTHORITY TO TRY TO HAVE LESS EXPORT-LED MODEL AND A MORE DOMESTIC-LED MODEL SO THAT THE IT WOULD BE VALUED. AND WE TRIED TO EXPLAIN FOR MONTHS, EVEN MORE THAN THAT, TO THE CHINESE IT WAS IN THEIR OWN INTEREST TO DO THAT AND THEIR PEOPLE AND MOREOVER IN THE INTEREST OF THE GLOBAL ECONOMY. AND IF THEY WANTED TO BE BIG PLAYERS THAT WOULD BE THE RIGHT WAY TO GO. ONE OF THE OUTCOME OF THE CRISIS IS THAT THE CHINESE AUTHORITY LAUNCHED A HUGE STIMULUS PACKAGE -- WHICH IS MAINLY DOMESTIC ORIENTED -- SO BECAUSE OF THE CRISIS -- I WON'T SAY BECAUSE OF THE ADVISES OF THE IMF AND MAYBE IT IS -- THEY DECIDED TO DO THE RIGHT THING. AND SO ONE OF THE OUTCOMES IS THAT IN THE COMING TIME I EXPECT THAT IT WILL NOT HAPPEN IMPORTANT BUT I EXPECT THEM TO RE-EVALUATE BECAUSE OF THE SHIFT OF THE ECONOMIC GROWTH OF CHINA FROM EXPORT TO DOMESTIC GROWTH. SO IT'S STILL SIGNIFICANTLY UNDERVALUE AND THERE'S A LONG ROAD TO GO. BUT I THINK THE CORRECT POLICY IS IN PLACE AND THEY WILL PRODUCE A RESERVE IN THE COMING MONTHS.
00:53:46	>>	HOW WILL THE IMF AND THE BANK O BOSUL COORDINATE POLICIES IN THE FUTURE ONCE THE CRISIS HAS PASSED.
00:53:56	>>	THE BANK OF BASIL? IS THAT WHAT IT SAYS?
00:54:00	>>	THE BANK OF WHAT?
00:54:01	>>	BANK OF INTERNATIONAL SETTLEMENT?
00:54:04	>>	YEAH. OKAY. THE BIF WHICH IS IN BASIL, IS KIND OF A AS I UNDERSTAND CAT OF CENTRAL BANKS AND THEY HAVE A HUGE ROLE IN COORDINATING THE MOST CENTRAL BANK. THEY DO THIS KIND OF WORK OF ORGANIZING THE LIQUIDITY AND WHAT IS CALLED THE BASIL COMEDY WHICH IS A SUBSIDIARY OF THIS BIS, IS THE BODY PRODUCING THE REGULATION IN THE BANKING SECTOR. SO WE'RE WORKING WITH THEM AND THE OTHER THING WE'LL WORK EVEN MORE CLOSE WITH THEM IN THE COMING TIME BECAUSE THE NEW HEAD OF THE BANK OF INTERNATIONAL SETTLEMENT IN BASIL IS -- THE FORMER GOVERNOR OF THE CENTRAL BANK OF SPAIN WAS IN THE IMF LAST MONTH AND NOW HE'S HEADING THE BIS SO IT WILL REINFORCE THE LINKS. HE'LL TELL ME INSTITUTIONS DON'T WORK THROUGH PERSONAL RELATIONSHIPS WHICH IS TRUE, BUT ALSO WRONG. PERSONAL RELATIONSHIPS ARE VERY IMPORTANT TO MAKE IT POSSIBLE FOR DIFFERENT TEAMS TO WORK TOGETHER AND THAT CERTAINLY WILL BE A VERY IMPORTANT THING IN THE COMING TIMES TO HAVE THE IMF WHICH IS NOT A CENTRAL BANK, A LENDER AND, ALSO, A POLICY ADVISER TO WORK WITH THIS GROUP OF FEDERAL BANKERS.
00:55:41	>>	WE ARE ALMOST OUT OF TIME. BUT BEFORE I ASK THE LAST QUESTION WE HAVE A COUPLE OF IMPORTANT MATTERS TO SHARE WITH YOU. LET ME REMIND YOU AND OUR MEMBERS OF FUTURE SPEAKERS. ON APRIL 21st, TOBI KEITH, THE COUNTRY MUSIC STAR WILL DISCUSS HIS WORK WITH THE USO. HIS BUSINESS AND TREATMENT BY THE MEDIA. ON APRIL 22nd, TOM VILSACK, THE U.S. SECRETARY OF AGRICULTURE WILL SPEAK. ON MAY 11th, JEFF IDLESON OF THE BASEBALL MALL OF FAME AND SPECIAL GUEST HALL OF FAMER AND FORMER OR IELE. AND I WANT TO PRESENT YOU WITH OUR COFFEE MUG.
00:56:26	>>	THANK YOU VERY MUCH.
00:56:28	>>	AND FOR OUR LAST QUESTION, HOW ARE THE IMF PARTICIPATE IN FINANCIAL SECTOR ACTIVITIES OF OTHER MULTILATERAL LENDERS? WILL IT BE MORE ACTIVE OR LIKE A LOAN OVERSIGHT?
00:56:45	>>	WHEN WE WORK WITH INSTITUTIONS -- I DON'T KNOW WHO YOU HAVE IN MIND. IT COULD BE THE WORLD BANK OR INTERNATIONAL LENDERS AND ALSO, NATIONAL LENDERS. SOMETIMES COUNTRIES THAT HAVE THEIR OWN DEVELOPMENT AGENCY. WE WORK CLOSELY WITH THEM. THAT'S NEVER BEEN A PROBLEM. WE DON'T HAVE THE SAME JOB WHEN YOU COMPARE THE IMF AND THE WORLD BANK, THE WORLD BANK IS MAINLY FINANCING LONG-TERM PROJECTS. BUILDING A DAM OR A SCHOOL. REORGANIZING AN INDUSTRY. THE LONG-TERM PROJECTS, TOO. WE'RE MORE ON THE MACROECONOMIC SITUATION ON SHORT TERM PREPARING AN ECONOMIC ENVIRONMENT WHICH MAKE IT POSSIBLE FOR THE WORLD BANK TO DEVELOP ITS OWN PROJECT. WITHOUT A GOOD ECONOMIC ENVIRONMENT THAT THE IMF TRIES TO CREATE, THERE'S NO WAY FOR DEVELOPMENT AGENCY LIKE THE WORLD BANK OR LIKE OTHER DEVELOPMENT AGENCIES, TO SUCCEED. ON THE OTHER HAND, WITHOUT A DEVELOPMENT AGENCY WHAT WE DO CREATING A GOOD ECONOMIC ENVIRONMENT WILL NOT BE ENOUGH. SO THERE IS SOME OVERLAP THAT DON'T DO THE SAME JOB. BECAUSE OF THE OVERLAP WE SOMETIME FIND WE HAVE TO WORK TOGETHER TO FINANCE DIFFERENT THINGS. ESPECIALLY WITH THE WORLD BANK WHICH IS OUR SISTER INSTITUTION, BUT ALSO WITH OTHERS. THAT'S NEVER BEEN REALLY, REALLY A PROBLEM. THE PROBLEM IS THAT WE NEED BOTH OF US, TO BE ABLE TO FACE THE MOST IMPORTANT PROBLEM ONE AT A TIME. TODAY THE PROBLEM IS TO GET RID OF THE CRISIS. I'M NOT SAYING AT ALL THAT THE DEVELOPMENT QUESTION HAS TO BE PUT ASIDE AND ISN'T IMPORTANT. BUT EVEN FOR DEVELOPING COUNTRIES THE MAIN PROBLEM TODAY IS TO FEED THE PEOPLE TO AVOID ANY KIND OF HUMANITARIAN CATASTROPHE AND THEN TO GO BACK TO A POSSIBLE DEVELOPMENT. AND THEN THE NEED OF LONG-TERM FINANCING BY THE FIRM BUT MAINLY, BY DEVELOPMENT AGENCY LIKE THE WORLD BANK OR THE IDB FOR LATIN AMERICAN TORE LATIN AMERICAN BANK. SO COOPERATION BETWEEN THESE INSTITUTIONS WORK RATHER WELL. AND, AGAIN, AS I SAID BEFORE, PERSONAL RELATIONSHIPS BETWEEN PEOPLE WORKING IN THE DIFFERENT INSTITUTION ARE VERY USEFUL BECAUSE THEY ARE OFTEN IN THE FIELD TOGETHER. SO THEY NEED TO BE ABLE TO WORK TOGETHER. AND I THINK THAT WHAT HAS BEEN A MANTRA FOR MANY DECADES THAT SOME FIGHT BETWEEN THE INSTITUTIONS. EVERYBODY WANTS THEIR OWN DOMAIN AND NOT WANTING THE OTHER ONE TO PUT THEIR NOSE IN IT IS BEHIND US. A LOT 06 IMPROVEMENT IN THE WAY THE DIFFERENT AGENCIES ARE WORKING TOGETHER. AND I THINK THAT'S FOR THE GOOD. AND REALLY FOR THE BENEFIT OF OUR MEMBERS. THANK YOU FOR THE MUG.
00:59:45	>>	THANK YOU ALL FOR COMING TODAY. AND I HAD LIKE TO THANK, KEN, THE PERSON THAT ORGANIZED TODAY'S ENGAGEMENT AND THE NATIONAL CLUB STAFF MEMBERS MELINDA, JOANNE AND HOW WHARD FOR ORGANIZING TODAY'S NEWSMAKER. AND ALSO THANKS TO THE NPC LIBRARY FOR THE RESEARCH. THE VIDEO ARCHIVES OF TODAY'S LUNCHEON IS PROVIDED BY THE NATIONAL PRESS CENTER. OUR EVENTS ARE AVAILABLE FOR FREE DOWNLOAD ON I-TUNES AND OUR WEBSITE. NONMEMBERS CALL THE NUMBER ON YOUR SCREEN FOR A TRANSCRIPT OR E-MAIL US. FOR MORE INFORMATION ABOUT THE PRESS CLUB PLEASE GO TO OUR WEBSITE AT PRESS CLUB.ORG. THANK YOU VERY MUCH AND WE'RE ADJOURNED.

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