Burton urges less onerous terms from IMF

THE FIRST item on the next government’s “to do list” would be to reopen the EU-IMF deal and secure less onerous but more achievable terms, Labour finance spokeswoman Joan Burton told the Dáil.

She said in the general election campaign Labour would seek a mandate from the people to reopen negotiations.

“It is quite clear that the Government, distracted by internecine conflict, took its eye off the ball in its dealings with the IMF,” said Ms Burton. “Rather than lead the negotiations himself, Brian Lenihan handed authority over to his civil servants.”

She added that it was Mr Lenihan himself who signed the memorandum of understanding.

“He will never be able to shirk his responsibility for allowing a hopelessly inadequate deal to be negotiated for Ireland in his name,” Ms Burton added.

She said if the penalty payment margin were to be halved to 150 basis points, it would bring down the State’s interest payments by €1 billion in cash terms by 2014.

Another major area for discussion, said Ms Burton, must be the extent of burden-sharing between taxpayers and bank bondholders.

“Chancellor Merkel made the commonsense observation that investors who take a risk should not be given complete cover by sovereign governments,” she added.

“However, her approach seems to be that of St Augustine: ‘make me chaste, but not yet’. The chancellor and other EU leaders had not yet accepted that part of the solution to the current banking and economic crises, never mind the next one, was appropriate burden-sharing between taxpayers and investors.”

Ms Burton was speaking during the debate on the Bretton Woods Agreements (Amendment) Bill 2011, which was introduced by Minister of State for Finance Martin Mansergh.

The Bill, he said, was technical and provided for the acceptance of the fifth and sixth amendments to the IMF articles of agreement.

Fine Gael spokesman Michael Noonan said the IMF had become more relevant to Irish life recently because it was a participant in the bailout package for Ireland.

A substantial reduction was desirable because at present rates, the funding was not affordable and there was a possibility of Ireland not being able to pay its way and hitting another crisis.

Sinn Féin spokesman Pearse Doherty said the Government was committed to drawing down an even greater amount.

“It has committed the people to wage cuts, cuts to social welfare, health and education,” he added. “Property and water taxes will be introduced by this or successive governments in the future.”

Independent Maureen O’Sullivan said there was a need to address the IMF’s practice of attaching policy conditions to loans.

“Questions arise regarding the IMF’s competence in working with southern countries. Does it have a real understanding of the economies of such countries?”