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IMF Azerbaijan Visit Cites Anti Corruption Agency Not Bokova As IMF Answered Inner City Press on Kenya

By Matthew Russell Lee, Patreon Video
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Feb 17 – When the International Monetary Fund held its biweekly embargoed press briefing on January 14, Inner City Press asked for the status of programs with Kenya and Costa Rica. Spokesperson Gerry Rice answered on each, video here.

  Now on February 17 from the IMF on Azerbaijan, this: "An International Monetary Fund (IMF) staff team led by Ron van Rooden conducted a remote mission from January 25 to February 16, 2021 in the context of the 2021 Article IV consultation with Uzbekistan. At the conclusion of the mission, Mr. van Rooden issued the following statement: Recent Developments, Outlook, and Risks 1. The COVID-19 pandemic has had a marked, but so far relatively short-lived, adverse impact on Uzbekistan’s economy. Although the pandemic hit the economy hard in the first half of 2020 and inflicted considerable hardship, the recession was moderated by strong and timely containment and support measures. These included an effective public health response and the deployment of a set of fiscal, monetary, and financial measures, made possible by substantial buffers owing to prudent macro-economic policies in preceding years, and thanks also to sizable international support. This strong policy reaction allowed for a sharp rebound in activity in the second half of the year, while the agricultural and construction sectors showed resilience throughout the year. This resulted in Uzbekistan being among the few countries posting positive overall growth in 2020, at a rate of 1.6 percent, although this was still about 4 percentage points less than the growth rate projected prior to the pandemic. 2. The authorities’ large support package was timely and well-targeted. The amended 2020 budget included sizable additional spending on health care, social assistance and investment, as well as support for businesses, including through tax relief and financial  support. The actual uptake was less than expected, in part reflecting the faster-than- expected turnaround in activity, as well as some delays in investment spending, resulting  in an overall fiscal deficit of about 41⁄2 percent of GDP in 2020, or some 21⁄2 percentage points less than envisaged in the amended budget. The Central Bank of Uzbekistan (CBU) lowered its policy rate and provided additional liquidity to banks, thus supporting overall liquidity and credit. Banks were encouraged to allow firms and households to defer  2  loan payments, providing sizable financial relief. Inflation continued to fall, although higher food prices kept overall inflation in the low double digits, ending the year at just over 11 percent. 3. Growth is expected to pick up further in 2021, but the level of uncertainty remains high and the recovery will depend especially on vaccine rollout. With the rollout of vaccines globally, the expected recovery of trading partner growth, and building on the domestic recovery in the second half of 2020, the economy is projected to grow by about 5 percent in 2021. The recovery could be delayed, however, by a resurgence of infections, a slower-than-expected rollout of vaccines, or possible new containment measures, as well as slower growth in Uzbekistan’s main trading partners and fluctuations in commodity prices, notably the price of gold. Given the current funding constraints of the World Health Organization’s COVAX program, the authorities rightly aim to secure vaccines from other sources as well. Fiscal Policy 4. The recovery will also depend on continued economic policies to protect lives, support growth, and mitigate economic scarring from the pandemic. It is no time to let up. The 2021 budget appropriately maintains an accommodative fiscal policy stance, allowing an overall fiscal deficit of up to 51⁄2 percent of GDP, including by ensuring that health care systems and vaccines purchases and distribution are adequately resourced, while social assistance is further expanded. Wage increases to catch up with inflation, which had been delayed in 2020, will also help support demand. Should downside risks materialize, additional support would be warranted. Notably, there is room to expand fiscal support further, by raising targeted transfers to vulnerable households and viable firms and accelerating public investment plans. As unemployment and poverty have increased due to the pandemic, there is a need to further expand the coverage of the social safety net, while improving its targeting. 5. The higher budget deficit this year can be offset by a gradual fiscal consolidation in subsequent years. Although public and publicly guaranteed debt is still at a relatively moderate level, it reached almost 38 percent of GDP at end-2020, nearly double the level of a few years ago. The government’s plan to move toward a rules-based medium-term fiscal framework is welcome. By gradually bringing the overall deficit down to around 2 percent of GDP in the years ahead, in line with the authorities’ commitments, public debt should remain sustainable. Existing international reserve buffers and low rollover risks mitigate potential risks of debt distress. As the recovery gets firmly underway, resources can be freed up to invest in human capital and infrastructure to help achieve the Sustainable Development Goals (SDGs).... The Anti-Corruption Agency is tasked with investigating possible corruption, but success in tackling corruption will also depend on fair and credible prosecution and adjudication. The planned asset and income declaration scheme will help detect corruption but should be kept manageable, by focusing on senior officials, and made effective through increased transparency." Nothing on Bokova...

 On Jan 14 on Kenya, Inner City Press asked about public debt disclosure and "On Kenya, does the government re-raising taxes including on individuals make an IMF program more likely?"

  Rice said the IMF is pushing a "pause on fiscal adjustment" for the year, for health spending, and that it might go to the IMF Board in early 2021.

  On Costa Rica, Inner City Press asked about the talks that began January 11 and "what is the status, and what is the IMF's response to statements that that "the public employment law, sale of assets, among others, are measures that must be taken"?

  Rice said the virtual talks have begun and will, he said, include civil society. Now the transcript:

Inner City Press: I wanted to ask about two programs or possible programs that seem to be kind of in play. One is in Kenya. It's reported, at least, that $1.5 billion program is getting near. There seems to be a lot of issues with the Paris Club. This sort of re-raising of taxes, at least as I understand it. And maybe -- it's reported, and I'd like you to confirm or deny the IMF asking for great public debt disclosure. Can you say, what are the issues from the IMF's point of view at to Kenya? 

And on Costa Rica, if there's no program, there's no plan B. That's, like, a big headline over there. But what is the status of the talks that began January 11, and what's the IMF's thinking about the sale of assets and other issues? Where does it stand with Costa Rica? Thanks a lot. 

MR. RICE: Thank you, Matthew. On Kenya, and on the status and plausibility of an IMF program, we are in discussions with the Kenyan authorities on the possibility of a program to support the next phase of their response to the crisis. We had a mission there towards the end of last year, and reached agreement in many areas, so that technical work is continuing. And we hope that will lead to something being presented to our board for consideration in early 2021.  Clearly, Kenya continues to face an unprecedented external shock that will severely challenge the economy's underlying health and the policy path forward. We have actually -- we are recommending a pause in fiscal adjustment this fiscal year to accommodate increased health spending and support for the economy during this shock. And we're also recommending continued supportive monetary policy response, as has been the case in Kenya.  And then as we move beyond the crisis, it will be critical that the authorities resume the pursuit of fiscal sustainability, fiscal adjustment. Especially now that the shock has increased the debt vulnerabilities, as you mentioned, Matthew. So we would be talking in those terms about a reduction of the fiscal deficit through a well-balanced policy mix. That's on Kenya.  On Costa Rica, again, status update. What can I say? The government did request an IMF program last year, again, to help fight the pandemic, put the economy on a growth path, protect the most vulnerable, and so on. I can tell you, Matthew, that an IMF staff team has begun virtual discussions this week, January the 11th, on policy priorities and economic plans that could underpin a potential IMF supported program.  And the staff team will be meeting with government officials, parliamentarians, civil society, the private sector, and academics. And again, discussions began this week, and we'll update you as those discussions progress.  Thank you for your questions, Matthew

Watch this site.

Back on January 8 Inner City Press asked the IMF's Helge Berger, Mission Chief, about China's so-called Belt and Road Initiative: "Your Article IV report cites China's "overseas lending projects" amid "rising geopolitical tensions and economic and trade frictions." How does the IMF think that rising debt levels among African countries, and increased skepticism about the "Belt and Road" will impact or be addressed going forward? -Matthew Russell Lee, Inner City Press. Video here.

Berger responded about the IMF's work to provide lower income countries "breathing space." He said while the IMF generally welcomes the BRI it stresses the need for transparency, where the money is going.

(An aside: Inner City Press has reported on the CEFC China Energy Fund Committee's activities in Chad and Uganda and in the UN, on which the UN is UNresponsive.)

Other questions included China's digital currency (Inner City Press also reports on crypto-currency cases in the U.S. District Court for the Southern District of New York and elsewhere). Berger said when used overseas an issue is that residents could start using another country's currency, if it is easier.

We'll have more on this.


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