Managing Director responds to questions from press

• Pages: 261-262

Page 261

Following are edited excerpts of the questions and answers that followed Köhler’s National Press Club address. The full text is available on the IMF’s website (www.imf.org).

QUESTION: As you look toward reform and restructuring, are there changes in the division of labor between the IMF and the World Bank that might be in order?

KÖHLER: First, it’s important that these two institutions work closely together. They should also have a basic understanding of how best to serve the needs of their countries and define a common ground to judge trade and debt issues. No institution knows everything, so there is a good opportunity for a division of labor. The World Bank should concentrate directly on poverty reduction and take the lead there and in structural reforms. This should fit with the IMF’s macroeconomic approach and with the new focus of the IMF to do more so that global financial markets become more stable and, after some time, also get more interested and engaged in poor and emerging market countries.

QUESTION: What kind of program should Russia have, and how large are its needs currently?

KÖHLER: My judgment is that this is a great country, so don’t humiliate it, but don’t be euphoric. The mistakes we made were mostly because we had been too euphoric, relying on rhetoric about reform programs. We need to see more implementation of good ideas. We have a good start with President Vladimir Putin. But my recommendation is to look carefully at what is implemented.

QUESTION: Currently, the Group of Seven is pushing the IMF to charge higher interest rates for long-term borrowers. Is this necessary?

KÖHLER: Well, I would have preferred that the Group of Seven present its ideas within the normal working process of the IMF. The direction of the Group of Seven proposal—that is, making the pricing more discouraging for borrowers—is right and should be considered carefully. But it’s a problem now because a big group of countries within the IMF feels itself lectured by the presentation of these ideas.

QUESTION: Some people have already judged the debt forgiveness initiative a failure. What kind of a grade would you give it at this point?

KÖHLER: First, debt relief is an important element. The promises that have been made, not least at the Cologne summit of the Group of Seven, and now reconfirmed at the Okinawa summit, should be delivered. The IMF and the World Bank are expediting this process, but just to write off debts is not the right...