Dr. Donal Donovan:

I think every year since 2000. If the Deputy looks at the reports, there was an urging by the fund staff that the Government should do a bit more. At that stage it was put more in terms of a higher surplus or a lower deficit - one and a half percentage point of GDP or something like that. More important was the collective failure to understand the underlying nature of Ireland's fiscal position, and this is the so-called cyclically-adjusted balance, the CAB. As far as one can tell, the IMF accepted unquestioningly the Department of Finance methodology, which in turn was based on the common EU methodology.

I am not saying I would have done this but I do suggest that it would have been appropriate analytically for the IMF to say, "Okay, that is what you do, that is what the EU does", and explain what it does and does not imply. The assumptions underling that approach are key and turned out to be flawed but let us change these assumptions and have another look at what the underlying fiscal balance of Ireland might look like in that situation, and it would probably have uncovered that the deficit was quite different. Whether this would have spurred action by the authorities is another matter.

On the financial sector, and looking at the banks, I suggest again some reasons. There were constraints. There were constraints of people. What Professor Honohan and his inquiry did to uncover the true story of what had happened in bank lending took four months of highly intensive work by a small team of specialised people. One cannot expect the IMF team coming to Dublin or to any country in two weeks to get even remotely into that kind of thing, so I am not sure it could have done more.

I do think it should have been more cautious in its assessments. It should not have accepted uncritically the soft landing hypothesis. It should have said, "This might happen but where is the evidence on the CBI's part that this is going to be a soft landing?", and there was not evidence in the 2007 report, as I am sure all the members are aware. There should have been more questioning. It should have been more critical. In terms of how far it could have gone, I think we all realise the environment one is in.