Transcript

I am sure you have followed closely other management and staff briefings on the global outlook and risks, and I will be brief in my remarks on this subject. However, it needs underscoring that the global economy retains significant momentum and that the United States and Canada continue to play a leading role in it. Growth in the United States should remain close to 3½ percent in 2006, the highest in the G-7 economies, and anchored by continuing low core inflation and strong productivity growth. Growth in Canada is expected to pick up slightly in 2006, remaining close to potential, and the second highest in the G-7. In both the United States and Canada, healthy corporate profits and business investment provide key support to the outlook.

Turning to Latin America and the Caribbean, this region has performed even better than we anticipated last fall—expanding at a robust rate of 4¼ percent during 2005—¼ percentage point higher than projected in the September 2005 World Economic Outlook. Indicators of poverty and unemployment have shown further improvements in many countries.

There is little doubt that the favorable global environment has played a key role in delivering this strong performance. Most countries in the region continue to benefit from strong commodity and raw material export prices and terms-of-trade gains, which have helped secure a third consecutive year of current account surpluses. Easy global financing conditions and record low sovereign spreads have also helped sustain the growth momentum.

But the region also continues to benefit from improved macroeconomic policies. Monetary policymakers, in particular, were successful in anchoring inflation expectations. On average, headline inflation fell to an average of 6¼ percent last year, despite (in many cases) the pass-through of high world oil prices and a narrowing of economic slack. This reflects the strong commitments to price stability throughout the region, including within the context of inflation-targeting regimes, as well as a willingness to accept greater exchange rate flexibility in many countries.

Fiscal positions in the region continue to show overall strength, and Chile remains a model of effective countercyclical policy. Overall, primary surpluses increased by ½ percent of GDP to 3¾ percent in 2005 and averaged 3 percent over the 2003-05 period. Although primary spending has been rising in a number of countries—a trend that needs to be watched very closely—buoyant revenues have kept primary fiscal balances in significant surplus. Of course, the region's fiscal revenues continue to benefit from the continuing high levels of oil and other commodity prices. Significant primary fiscal surpluses and debt relief for low income countries under the MDRI have helped countries in the region make further important progress in lowering the public debt.

A number of countries—including Colombia, Brazil, Ecuador, Mexico, Panama, Peru, and Venezuela—have also taken steps to improve debt structures and reduce interest costs through a series of buy-back, exchange, and pre-payment operations. At the turn of the year, Brazil and Argentina repaid all outstanding obligations to the IMF (US$15.5 billion and US$9.6 billion, respectively) and, in March, Uruguay advanced US$625 million of its 2006 payments. Moreover, financing requirements for 2006 appear to be nearly complete and some countries have already begun to pre-finance 2007 obligations. Progress has also been made to deepen local currency markets, and Brazil and Colombia floated global bonds in local currency over the past year.

Against the backdrop of a still supportive global context and a generally strong policy environment, our assessment is that the near-term prospects for the region are good. Indicators for activity in the first quarter have come in strong for many countries, including Argentina, Brazil, and Mexico. This continues to translate into further declines in unemployment, now down at or close to the single-digit range in many countries. The region is expected to expand by 4¼ percent on average in 2006 and inflation is expected to fall further to 5¾ percent this year. Looking ahead to 2007, growth should remain above trend, but is expected to slow to potential as output gaps begin to close and the stimulus from the commodity price boom wanes.

Of course the outlook is subject to risks. Oil markets remain very tight and, especially in the event of a further shock to prices, growth of trading partners could begin to be more severely affected. This could, in turn, dampen non-fuel commodity prices, which have been an important offset to high oil prices for many of the region's oil importers.

Notwithstanding recent improvements in debt and debt management, public debt remains, on average, still high in the region, and spreads are at near-record lows, suggesting that the region would be affected by any abrupt tightening of credit conditions, although with greater resilience than in the past.

The electoral timetable is heavy over the coming months but, over the recent period since 1999, macroeconomic stability has been strengthened—rather than weakened—through political transitions, underscoring the growing social consensus for low inflation and financial stability in the region.

In the Caribbean, many countries face the challenge of adjusting to the loss of trade preferences in key commodities.

The region is at an important historical juncture. The recent strong performance of the regional and global economy, and the continuing generally favorable outlook, provide a rare opportunity for policymakers in the region to move decisively further in addressing vulnerabilities from low growth, poverty, and inequality. This would pave the way for raising productivity and the growth potential in the region over the medium term, and better meeting the increasingly urgent social aspirations of the population.

Entrenching the region's improved track record in macroeconomic stability will mean building on its accomplishments in monetary and fiscal policy, especially regarding the strengthening of macroeconomic institutions that is underway in many countries. Regarding monetary policy, my sense is that monetary policymakers will need to be careful to resist leaning too heavily against pressures on exchange rates in either direction, as this risks raising quasi-fiscal sterilization costs as well as compromising the commitment to price stability.

Regarding fiscal policy, where primary spending has been rising rapidly recently, policymakers face the challenge of ensuring that it is both well targeted toward the social and physical infrastructure, as well as consistent with the further decline in debt ratios.

Looking ahead to the region building its medium-term growth potential, both higher and more efficient investment will be needed, and many countries are already engaged in the effort to strengthen productivity.

I would highlight, here, just two priority areas—improving the business climate and raising financial intermediation—toward this end. In both areas, strengthening regulatory frameworks through reforms that provide for greater flexibility and competition constitute an important part of the outstanding agenda. Finally, greater flexibility in labor markets would ensure the continued robust growth of employment.

In summary, the Latin American and Caribbean region has done well in recent years, and the broad strengthening of policies achieved throughout the region has greatly improved its resilience against shocks, compared with the situation at the start of the decade.

To sustain and further strengthen growth, and to insure economies against global risks, the priority is for governments to persevere with stable macroeconomic policies and press ahead with structural reforms that remove barriers to investment and growth. It is an agenda in support of which we will be actively engaged in the period ahead.

With this brief overview, I will now take questions.

QUESTION: The World Economic Outlook indicates—and I do not know if this report that you just issued mentions it as well—that two countries in the region have inflation in the double digit range: Argentina and Venezuela. And both countries have what seems to be a policy of some kind of price controls.

I am curious why the World Economic Outlook does not mention that? A lot of private economists say that price controls really are sort a dead end street. Does the IMF have any opinion on price controls in Venezuela and in Argentina?

MR. SINGH: Well, the first thing to note is that the inflation numbers that I gave, and are in the World Economic Outlook, are inclusive of the trends in all countries. So that average includes Argentina and Venezuela.

The second point that needs to be made is that from an historical perspective, the average inflation rate in Latin America has been coming down in recent years, and is now quite low.

And, thirdly, while it is the case that Argentina and Venezuela are showing double digit inflation rates, in both countries, I believe there has been some recent improvement as their inflation rates have also come down from where they were a few months ago.

And, fourth, in both countries, it is significant to note that as inflation reached the double digit range, the political priority to bring inflation down has been very strong. So there is no lessening, in the desire to bring inflation down in Argentina and Venezuela, another historically striking phenomenon.

Now, from our point of view, bringing inflation down over the medium term clearly requires a supportive macroeconomic policy stance. You see in Argentina the government's efforts to retain significant high primary fiscal surpluses, much higher than we had discussed a couple of years ago. I think they remain convinced and committed to retaining significant fiscal surpluses, as part of their anti-inflation policies.

Now, it is true that there are other policies also being followed towards bringing inflation down. The way I understand it is that the government views those policies as important to brake inflationary expectations. What is key to us is that this needs to be backed by supportive macroeconomic policy stance.

QUESTION: I just want to question one thing that was mentioned in the World Economic Outlook especially linked to the country. It is about the oil windfalls, and the uses of them. The World Economic Outlook says that consumers in Mexico have been protected by oil pricing policies. So the oil windfall hasn't been used to fortify the fiscal accounts.

Could you please tell us more about it?

MR. SINGH: Well, I think globally and across the region countries are striking a balance in the pass-through of high and volatile oil prices into domestic prices.

What we are seeing is a lot of variability in that pass-through ratio. Now, from our perspective and from a domestic sustainability point of view, we have been making the point that countries need to do all they can to pass on more of the oil price increase, but the extent to which it is done and the timing of that depends also on the fiscal circumstances. What I would note in the case of Mexico is that as they have looked at the fiscal implications of the pass-through, they have been trying to restrain the growth of current spending and bring the public debt ratio down.

I do believe that how they have struck that balance has not compromised the basic objective in Mexico of continuing to bring the public debt ratio down.

Caroline, do you want to add to that?

MS. ATKINSON: I would just add that I think the new fiscal responsibility law is an important step forward in taking a medium-term view of Mexico's fiscal stance.

And of course the authorities have been preserving macroeconomic discipline and consolidation in a way that has provided strengthened stability to the economy over recent years. Looking forward, there will be, I am sure, a continued debate about how to make the best use of Mexico's oil resources, including through further improving public finances, while also providing needed investments, adequate social spending, and so on.

QUESTION: You mentioned that there is a risk of a new cycle of public spending in Latin America. I would like to have your assessment regarding the fact that in Brazil, we have a lot of pressure from social spending, from the social security system and on the top of that, there is a growing number of employees in the government.

MR. SINGH: Thank you. Well, first, I would say Brazil has in some ways greater room for maneuver on this issue because Brazil's revenue ratio is high relative to other countries in the region.

The second thing I will say is that the authorities in Brazil have made it absolutely clear through their commitments and their actions that they are not going to sacrifice macroeconomic and fiscal discipline.

And so, obviously, there is a very credible track record in Brazil on the primary fiscal surplus. Just last week, this has been reaffirmed when the government sent to Congress the LDO guidelines for the next three years.

So I think we can be fairly confident that the public spending that is rising in Brazil as in other countries is being matched by a growth in revenues. What we have been told is that the government remains fully committed to adjusting that growth rate in spending if necessary to achieve the primary fiscal surplus objective, even as it tries to increase the allocation and orientation of spending toward necessary infrastructure, education, and poverty reduction.

Mr. Collyns and Mr. Singh

You want to add to that?

MR. COLLYNS: Yes. I think as Anoop says, this is clearly an important issue that is not just a concern to us, but very much a concern to the government. The government is taking steps to control the growth in spending, particularly in social security. The government, in fact, has also been quite tight in terms of controlling the public sector wage bill. There has not been any upward drift in the public sector wage bill in recent years.

There are important areas where the government is increasing spending quite rapidly, particularly in targeted social programs, Bolsa Familia. We fully support those increases which are being instrumental in helping to bring down poverty in Brazil.

So the key issue is making sure that spending is well targeted, and the government has tight control over the less productive areas of spending. The government is aware of these issues. There will be a need, I think, over time for some more fundamental reforms, for example, of revenue earmarking. Revenue earmarking means that when you have very strong growth in revenues, as Brazil has had in recent years, that trend generates by itself increased resources for spending. The government has been thinking about how best to tackle this issue.

QUESTION: I have a follow up on the question about price controls. You seem to say exactly the same things that Felisa Miceli, the Minister of Economy is saying, that she's using control over prices in order to deal with expectations, while she deals at the same time with other aspects of the macro economy.

But do you think this strategy can work?

MR. SINGH: I do not wish to speculate. I think what is important regarding the policy in Argentina is the following.

First, there is no doubt of the government's commitment and desire to bring inflation down. It is very, very important. That is clear.

Second, there can be no doubt, given their recent track record, of the government's ability, commitment and desire to have a strong fiscal policy, which is helping keep inflation down. So we should wait and see how their strategy unfolds, maintain a dialogue on it, and not try to second-guess it too much.

QUESTION: In your update, you say that the region's recovery in recent years has had a significant effect on reducing poverty and inequality, which is exactly the opposite of what Mr. Rato said yesterday. Rato said that the growth had been unequal, and because of that, poverty has not been reduced in Latin America, and actually according to the World Bank, the millennium objective goal of 2015 is not going to be done in Latin America. So I do not understand.

MR. SINGH: Well, I commend you for trying to probe for inconsistencies.

[Laughter.]

MR. SINGH: That is very good. Maybe you should join the Fund staff.

[Laughter.]

MR. SINGH: What I would say is that there is no inconsistency. Even if there was one, I would have to say that there is none, but in this case, there truly is none. There are two things going on. One, longer term trends. If you look at where the region is now today compared to ten or 15 years ago, you find that poverty and inequality have remained very high in the region. Whether it is come down slightly or gone up I think is beside the point. The fact is that poverty and inequality in the region in my view are too high and they've been high for a long time.

The second point is that as you look at the recovery from crisis in 2002, you see very encouraging data coming from countries. A few months ago, the latest survey from Brazil showed a significant drop in the indicators of poverty from 2002 to, I believe, the end of 2004.

You also have in Argentina very clear evidence of how poverty has come down. In Argentina, extreme poverty is down to just 12 percent. So there have been improvements in the short term, recovering from the effects of crisis in 2002. But one has to also look at longer-term trends and conclude that you need to consolidate the recent progress, so that over the longer term, this could be a systematic trend down and not just a short-term phenomenon.

QUESTION: In your report you say that you are worried by the growth of populism in Latin America, and you urged the authorities to make urgent reforms to stop this trend. I would like you to elaborate on that. Are you worried by the anti-free trade speeches and protectionist speeches that we hear in the region right now from some candidates or even from some presidents?

MR. SINGH: Well, you know, we in the IMF are not the experts on the politics, so I do not want to get into this issue too deeply. What I will say maybe are three things. Firstly, my point on macroeconomic stability in Latin America and the political cycle. As you look at the period since the late 1990s, you find that macroeconomic stability has strengthened and not weakened in the course of the elections and the transitions that have been taking place there. I have written an article on this that appeared at the time of the IDB meetings on this issue, and if you wish, Francisco can find a way to make that available to you.

The second point I would make is that we should look at actions and not words. We should look at what governments do. And if you do that consistently, you will find that there continues to be in virtually all countries a strong desire to adopt the kind of agenda that is going to take the region forward. So I would look at what governments do.

And finally I would say that in terms of the basic objective for the region, I am convinced, as I have spoken to policymakers across the region, new and former, that they recognize the need for the region to step up its growth rate so that it can be a fuller partner in the globalization process.

Point number three, the policymakers recognize that it has to be done with macro stability. There is no one out there, as far as I know, of any shade, saying that we now have to now have large government deficits and high inflation. There is an absolute concern, that growth must take place with low inflation because that is what the people want, especially the poor.

And I think there is a lot of recognition that investment is needed. You've seen this over the last few years. There is an infrastructure gap and there is a need to get investment done, and that is recognized. You also have the reality of governments that are trying to bring the public debt down. So when you look at raising investment, it is unavoidable that the private sector has to be a partner in it.

Finally, there is the historical empirical result that productivity in our region has been less than in other emerging markets and there is a need to raise productivity as part of the formula for raising the growth rate.

I think these points are by and large accepted across the region. Now, governments are trying in different ways to achieve these goals. Many of these governments are new, so we need to give them time to develop their policies and not to second-guess them too much.

QUESTION: Just a couple of questions on Venezuela. On the poverty issue that you mentioned, have we seen since the recession in 2002 positive trends in poverty reduction in Venezuela?

Also, before the referendum campaign in Venezuela, economists from the IDB were very critical of policies using revenues from oil sales to invest in social and anti-poverty programs in Venezuela. The phrase "killing the goose that laid the golden egg" was repeated endlessly in the media.

I wonder if you might tell us whether you feel this spending, investing oil revenues in social programs is actually a waste, a threat to the long-term viability of Venezuela's economy or whether it is investing in human capital, which in the long-term will bring results?

MR. SINGH: Well, what I would say briefly on Venezuela is that they have been trying to use their high oil earnings as an important instrument to achieve their social goals.

And I would imagine that in the short run, this social spending would be having its normal effects. We do not have data right now on how poverty reduction has developed over the past few years in Venezuela. That data might exist, but I do not have them at hand right now.

Macroeconomic policy in the context of high oil earnings is a very important issue that we are discussing with oil producers in the region and which we hope to be discussing with the Venezuelan authorities in due course, but I do not want to give you a sound bite now.

What I would say is that oil earnings obviously are being very instrumental in social transfers and these are obviously helping in the short-term situation. The extent to which it is having systemic effects is something which we have to wait for data and for further discussions.

QUESTION: Argentina and Brazil are no longer the stars of these meetings, and not even Turkey or any Asian country. So this meeting does not look like others in the past.

With this close to the ideal situation, do not you think the IMF is losing its identity?

[Laughter.]

MR. SINGH: Well, you know, I was expecting this morning very few of you here for the reasons you mentioned.

[Laughter.]

MR. SINGH: And I was surprised to see as many of you as I do see, so I would say that itself answers your question.

But more seriously what I would say—and I have said this before—there seems to be a view that the normal state of affairs for the IMF and for the global economy is one of emerging market country crisis. There seems to be a view that the normal state of affairs is for the IMF to be constantly engaged in large lending programs.

In my view, that is not the normal environment for the IMF. The normal state should be a global economy that is functioning well with high trade and high growth, and little need for the kind of lender of last resort assistance that the Fund has given in recent years.

So I do not see this as an abnormal situation at all. I think, in fact, it is a very good situation because allows us to have a more even exchange with our counterparts without the pressure of reaching agreement on a policy program in the next one or two days or one or two weeks.

So I see this as a much better atmosphere to discuss global and region-wide issues. And this is what we have been doing, and I think it is something which is good for us. I think it is something which is very good for the region's policymakers.

QUESTION: I have a question on Mexico. Again, the World Economic Outlook this year emphasized the necessity for Mexico to advance in its structural reforms. This is an issue that I have been hearing in these meetings I think for the last two or three years.

So the question is what the IMF sees as a result of this inactivity in this process? Because obviously if the members of the Congress are not acting on this issue, it is because they do not feel as much urgency to complete this process for these reforms as the IMF.

And by the same token, but in a broader sense, going back to the issue of the electoral process in the region, there have been some voices, particularly in the banking sector, that point to the possibility that the process of reform across the region could be slowed down, even reversed, in some country as a result of the election of populist or leftist governments.

What is your assessment in that regard?

MR. SINGH: Well, you have a number of questions there. I am not going to speculate what any future government is going to do. We have just got to wait and see. We have been proved wrong in the past, all of us, as we have speculated on what a government or what a leader would do.

Turning to the issue of reforms in the region and in Mexico, while it is very easy to say that nothing has been done, but actually it is quite the contrary. If you go back over the past five or ten years, certainly in the case of Mexico, a lot has been done.

You have a very sound macroeconomic policy framework in Mexico. You had over the last ten years great reforms on the banking and financial sector side. You see the financial sector in Mexico much stronger, resilient to possible future shocks.

Now, obviously, there is a core challenge in Mexico and the region, as I said before, of raising the growth to a rate more in line with that of other countries that are growing very fast, for example, in emerging Asia. The structural agenda, as I said just now, is I believe well-known.

Finally, I think the reform issues for Mexico are a part of that country's rich public debate, with a lot of reform proposals being put forward. That is a normal process, and it takes time in all countries to build a consensus to implement reforms. You cannot expect major structural reforms to be implemented on the eve of elections. So we need to wait and see.

But one key difference today from, say, five or ten years ago is that I believe there is greater consensus on what needs to be done. The issue has been subject to a huge public debate, which is as it should be.

Caroline, you want to add to that in the case of Mexico?

MS. ATKINSON: I think that is fine. Thank you.

QUESTION: We have been hearing in these meetings that the future role of the IMF will be much more linked to evaluations of current exchange rates. So my question is a little bit on this spirit.

We are seeing a big, what many companies in Brazil consider as an overvaluation of the currency. We have been trying to deal with that in a market-oriented way, but it hasn't been very successful. We have seen in the World Economic Outlook showing already a prediction that the current account surpluses will fall, we have a 1.8 percent of GDP current account surplus today, and his prediction is 0.2 for 2007.

So I would like to know if you consider that we are going into a "Dutch disease" scenario, and what should Brazil do about the overvaluation of the currency?

MR. SINGH: Well, you talk of overvaluation as if it is a recognized reality, but I do not agree. I think you see in Brazil exports, continuing to grow at double digit rates, and this is not a result of just a few export categories benefiting from high world prices. You see strength in Brazil's exports across the spectrum.

What we have seen is that Brazil has been able in recent years through its previous and continuing structural reforms to build up an export capacity today much greater than we could have expected. What we are seeing today in Brazil is an export response whose depth and intensity exceeds what many of us thought possible three years ago.

So it is not simply a question of just the exchange rate, but the competitiveness of the economy, which is improving.

On the exchange rate, I think what we had after 2002 was a sharp drop in the exchange rate and as with other recoveries from crisis, the real has recovered. I think it is back to a normal long-term trend rather than in any major way overvalued.

QUESTION: Why would the currency account surpluses fall to zero next year?

MR. SINGH: Well, I do not want to get into specific forecasts because they are always based on certain assumptions, but it is quite normal and part of the adjustment process, that as countries increase their growth rates, you are going to find a large import response, which is going to shrink the trade surplus. That is a quite normal phenomenon as a country goes to a higher growth path, especially given the state of development of some of the countries in our region. It is quite normal for a surpluses to fall as the growth rates rise.

QUESTION: From what I have seen in the World Economic Outlook and also in the Regional Outlook, the holdouts issue disappeared and the first question would be that one. Can you elaborate on that? And the linked question would be on Mr. Rato medium-term strategy, he mentioned that a staff paper is coming in regards of the debt restructuring process and the good faith efforts in regards of how to proceed in a timely fashion.

I believe that you will say that this is from another department, but in any case, what would be your comments after dealing with the Argentine issue? So it would be the staff paper on the holdouts issue and the World Economic Outlook on the real.

MR. SINGH: Well, I can give you very quick answers and I think correct answers. On the first issue, you have to ask the government, not us.

On the issue of what is going to be done in the Fund, you are right that that is on the agenda to review the current practice, and we have to wait for a staff paper. That issue is under discussion and we are not at the stage where a paper is ready so we need to wait for that.

QUESTION: I have to confess I am a bit puzzled by Argentina and Venezuela. If I understand you correctly on Argentina, you said that they are implementing the right policies to fight inflation, but then your forecast foresees an increase in inflation in 2006 and 2007.

And at the same time there is quite dramatic drop in growth, almost by half. And the same for Venezuela actually. So, you know, I wonder if you could elaborate on why this is happening? What is feeding inflation here?

And then if I may ask something else? You have emphasized the need for increased private investment, but some countries are moving away from that. I mean you have Ecuador and Bolivia, for example, that are not opening their energy markets. On the contrary, they're sort of closing them, and Peru might be another case if Ollanta Humala wins the election. So why is it important for a change in policy there?

Thank you.

MR. SINGH: Again, I would not speculate what Peru might do. I think we have got to wait and see. We only have current policies in Peru, and those policies have done very well in terms of producing very high growth rates over the past ten years.

Where Bolivia is concerned, again we have to wait and see what the new government does. We are not at this stage yet.

On inflation, what I meant to say in Argentina and for the other countries is that the process of bringing inflation down requires a broad response of many policies, and I highlighted fiscal policy as one important component, and I was saying that that component remains strong. Now, as we look ahead into what will inflation be in the next year or so, we have a forecast that shows it being slightly higher in 2006, but that I believe—at this point—is mainly the carryover effect from last year.

I think what's important, in both Venezuela and Argentina, is the commitment and desire to bring inflation down, and these countries are trying a variety of policies to do that. My understanding is that in the view of those governments these policies are designed to brake expectations.

What I would again emphasize is that those policies are more effective in the context of a firm macroeconomic policy response. We see in Argentina that the primary fiscal surplus remains significant and monetary policy is being tightened.

Ranjit, you want to add to that in the case of Argentina.

MR. TEJA: I would only say, on this whole issue of inflation and price controls, that a macroeconomic response must eventually be phased in. I think that must be a part of the package of measures to lower inflation in the long term. We do think that inflation is a macroeconomic phenomenon, and in the end it must be tackled by macroeconomic measures.

Controls can play a role in braking inflationary expectations, which is the view of the government. We can understand that, but in the end, I think we see a macropolicy response as being an essential part of any response. How that is phased in and so forth are things that I am sure the government is giving thought to. In fact, it is already taking action. It is not like there is no macroeconomic part of their response. As Anoop said, the fiscal surplus is being maintained. Monetary policy has been tightened. So there are elements of a macropolicy response that can be built upon so that Argentina can achieve the gradual decline in inflation that it is seeking.

QUESTION: Which other elements would be needed?

MR. SINGH: Well, these are the two main ones. You've got monetary policy and fiscal policy. As Ranjit just said, and I said earlier, we already have a fiscal response. You've also seen monetary policies being tightened. Obviously there is a way to go, but what is important for us this morning is not to look at every detail of policy, but to recognize that the government in Argentina is committed to bringing inflation down. It wants to do that. And that is a historically good thing.

QUESTION: Would you think a time will arrive when the monetary cycle will change, the good environment will end and interest rates will be shaken? In the near future?

MR. SINGH: Well, there have been short-term movements which are quite normal, but you know overall we are still in a world where global financing and financial conditions remain very favorable. There is no doubt about that. It is still a very favorable world from a financial point of view.

MR. BAKER: Thank you.