THE INTERNATIONAL Monetary Fund (IMF) has not received an application for support from the Government, it said yesterday in a briefing on its Irish mission.
The fund’s director of external relations, Caroline Atkinson, said the focus of the meetings in Dublin would be to “look at whatever measures might be needed to support financial stability and protect against market risks in the light of the Irish Government’s four-year budgetary plan”.
Ms Atkinson said that often when the IMF goes into a country, it acts like a doctor. “We get called in because the patient is sick. And we have some medicine which is the liquidity and the funds that we can provide. But we also have to suggest . . . whether it’s dieting or some other measures that may sometimes be difficult for countries to implement. What we are doing is smoothing that adjustment, providing money so that countries don’t have to take such difficult measures as they would have to without the money.”
Chief of the IMF mission to Ireland Ajai Chopra is the acting director of the fund’s European department where he has worked for the past eight years and leads euro zone consultations.
The remaining 10 to 12 banking experts and country specialists travelled yesterday and are to begin technical discussions with Irish officials this morning.
A key official is Ashoka Mody who has been the mission chief for Ireland’s last two “Article 4” consultations, the economic check-up that all IMF members undergo annually.
Ms Atkinson said talks may include the fund’s views “on the Government’s budget plan . . . on tax and spending measures . . . on Ireland’s need for financial support”. She stressed that “we are not in programme discussions. We are having technical discussions right now. We are there with the EU and the ECB, so it’s a three-party discussion with the Irish.”
The IMF never says how long a mission will last at the outset. Asked whether the technical mission could become a programme assignment that would negotiate a loan package, Ms Atkinson said a request from the Government and internal fund approval would first be required. “We are able to act very quickly and very flexibly, and we are always ready to do that.”
Only one euro zone member, Greece, is under IMF supervision. Hungary completed its programme with the fund last month. Latvia and Romania are the two further non-euro-zone EU members who have concluded agreements with the IMF.
Bailouts of European countries have typically involved joint funding between the fund and EU.
Under standby arrangements, the IMF’s lending rate is 3.38 per cent. For longer than three years the rate goes up to 4.38 per cent, which as one official noted is still a lot better than up to 9 per cent Ireland would be forced to pay in the bond market. The calculation is based on different rates for different tranches and additional service charges and commitment fees.
Asked whether the fund would demand spending cuts more draconian than those already planned by the Government, Ms Atkinson said: “Increasingly, over the last couple of years, we’ve been focused on the need for what we call social conditionality – on the need to protect the very poorest and the most vulnerable when there are adjustments required in the government deficit.”
Meanwhile, an editorial in the New York Timessaid "the IMF and EU are expected to demand further, deep budget cuts in exchange for a financial lifeline". It stated that "convincing creditors to take a discount" offered the only hope of resolving the crisis. Ms Atkinson would not comment on Ireland's 12.5 per cent corporate tax rate. "No, we don't have a defined policy," she said. Earlier, she stressed the importance of "Government ownership of policy measures".