The IMF and Ireland
In an article in the Irish Times Michael Casey, formally of the Central Bank, outlined his views on the relationship between Ireland, the EU and the International Monetary Fund. The IMF was established in 1944 to promote international monetary cooperation, exchange rate stability, and orderly exchange arrangements; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. Prior to the financial crises the IMF was considered by many to be at its best an organisation on the brink of irrelevance or alternatively an organisation which had prolonged underdevelopment in the Global South through the promotion of liberal economic policies and the strict conditions under which it granted relief to states in dire financial need. At both the 2008 London and 2009 Pittsburgh G-20 Conferences it has reemerged as a fundamental actor in international economic relations. Part of this process has been the IMF’s attempt to rehabilitate its image. It has set up a faster loans procedure aimed at states with traditionally good economic track records, to enable them to make use of short-term credit facilities. This is known as the Flexible Credit Line (FCL). Mexico was the first state to make use of this facility.
Casey in his article remarks that Mary Harney’s assertation that if Ireland did not make cuts the IMF would be called in, correctly makes the point that the IMF is characterised here ‘like the big bad wolf’ to be avoided if it all possible. Casey is correct that the snobbery attached to going to the IMF, an organisation that is now considered by many to be only to give a helping hand to the Global South, can be short sighted, though I would agree with him that there may be better local (EU) solutions if the economy required a bailout. However the characterisation of the IMF as the purveyor of doom is incorrect. While its warning system failed with regard to the current financial crises, its recent reports on Ireland tend to have more than a ring of truth about them. The Government may regret not advocating a more honest policy with regard to Ireland options, should Ireland be forced to go to the IMF, if the horror which the Irish people feel towards the big bad wolf resembles Little Red Riding Hood the blame will squarely be at the Government’s feet.