Pearse Doherty (Donegal South West, Sinn Fein)

Dúirt an Aire Stáit go dtugann an reachtaíocht seo éifeacht don laghdú sa ráta úis a bheidh áíoc ag an tír seo ar an €22.5 billiún atá le tarraingt síos de réir an maoiniú atá curtha ar fáil ag an IMF mar pháirt don bail-out. Tuigim gur reachtaíocht teicniúil atá i gceist agus go mbeidh buntáiste faoi leith ag dul go dtí an Stáit seo siocair an laghdú sin. I dtús báire, ní mór dúinn machnamh an bhfuil an airgead seo de dhíth orainn. Tá sé ráite go simplí aguis go soiléir ag Sinn Féin nár cheart go mbeadh an IMF anseo. Tá go leor airgead againn sa tír seo chun maoiniú a chur ar fáil do na seirbhísí cuí, gan tacaíocht a thabhairt dóibh siúd a chur a lapaí amach sna bainc, agus dul ar ais go dtí na margaí domhanda roimh deireadh na bliana.

The Bretton Woods Agreement (Amendment) Bill marginally increases Ireland's IMF voting quota and has the effect of reducing the interest rate and a portion of the bailout loan. I understand it is envisaged that each member country would pay a certain amount of money in its own currency into the fund. This entitles a country to apply for short-term loans when it runs into short-term balance of payment problems. If a country wishes to borrow more than its allocated quota, it must submit itself to a strict regime of monetary and fiscal policies drawn up, principally, by the IMF. This is what has taken place here. We will have a large quota when the thresholds are reached, when other states transpose the proposals agreed in 2008 and when they come into effect subsequently. The increase in quota means some of Ireland's initial deposits will cover loans extended to us. I understand this means, in effect, Ireland may receive approximately €486 million from the IMF without interest, once enough members have approved the 2008 reform.

The Government is committed to drawing down an even greater amount from the fund. It has committed the people to wage cuts, cuts to social welfare, health and education. Property and water taxes will be introduced by this or successive Governments in the future. Will the Minister of State explain how the reduction announced today affects the first tranche of the IMF loan, amounting to €5.8 billion, drawn down yesterday? Will this be applied retrospectively to that part of the loan? When do these measures take effect? Can we be sure the €8.5 billion drawn down from the IMF yesterday will be subject to the new interest rate?

I examined the figures presented by the Minister for Finance. I note that a total of €14.2 billion of the IMF portion of the bailout will be drawn down by the end of this year. The Minister of State remarked that the 2010 reforms are not due to come into effect until August 2012. Have negotiations taken place with the IMF to secure the reduced interest rate which has already been agreed by the board but which must be ratified by members? Some €14.2 billion from the IMF will be drawn down this year. Were we to secure the reduced rate of 80 basis points, it would represent a saving of approximately €130 million in interest payments each year. When the change comes into effect in 2012 will it be retrospective as well? Has any discussion taken place in this regard? I understand the interest on the IMF loan is charged at daily rate. The IMF will cut its average rate of 5.75% by 15 basis points to 5.6%, which the Taoiseach claimed this morning he had done much to secure. In fact, it is due to a technical point where Ireland has a larger share of the IMF quota because of rule changes agreed three years ago. The reduction was not because of the Government's commitment to securing a fair deal for its people, and neither was it due to the negotiation skills of the Minister for Finance, Deputy Brian Lenihan, nor that the interest rate is now considered too punitive.

The average interest rates for our so-called bailout are still close to 6%. Focusing on this small reduction in the interest rate for the IMF loan will not change the disastrous effect the drawdown of these loans will have. The interest rate may have reduced by 15 base points but the price tag attached to this loan for the people of this State is crippling.

The IMF has seriously damaged the lives of people across the world through the application of stringent policy conditions to its loans. It will continue to do so, as we saw in the budget this year. The IMF practice of attaching policy conditions to its loans should be ended. It has demonstrated it does not have the competence to make reasonable recommendations to nations on economic decision-making not least in developing countries such as Mali and Somalia, but also in Ireland.

The IMF's role in Ireland's banking crisis must not be forgotten, as highlighted by the two reports on the crisis published last year. The Central Bank Governor, Professor Patrick Honohan, stated in his report the IMF was not strongly or consistently critical of the underlying dynamics of fiscal policy. Its oversight failed abysmally and it is now interfering to steer our economic course. The IMF is also continuing to promote its usual pro-cyclical measures including strong cuts to public expenditure, excessively strict fiscal policies and an over-preoccupation with privatisation and the liberalisation of trade and finance. It has already set out a shopping list of policies in return for monetary assistance. This is not assistance but dictation.

In return for this erosion of democracy, what has been gained for the Irish people? The loans from the EU and the IMF will be used to repay the bondholders who lent to the Irish banks that have now crashed and burned and whose liabilities the State has recklessly guaranteed.

While other parties in the House may talk about what happened three years ago when the bank guarantee was introduced, they will continue to honour it for senior bondholders and gamblers in defunct banks who would not be capable of standing on their own two feet without State intervention. This Government and the alternative future government will continue to bail out the private debt of the bondholders using IMF-EU moneys at these interest rates. These moneys will be used to compensate for the failure of these same institutions in the lead up to the financial crisis. The Government has no focus on job creation or economic stimulus. Instead, it focuses on taking money from the less well-off rather than the wealthy.

The amendments being made by the Bill have been described as applying fresh paint while the foundations rot. The changes agreed so far have been deeply insignificant and have failed to give any real power to impoverished nations. It is easy to discuss the changes the Bill will have in this State. It is also important to consider its effect across the world given that the IMF is an institution which has often devastated economies due to the damaging policy conditions it attaches to its lending programmes.

The package contains modest improvements in existing governance procedures for the IMF but they fall short of the creation of an institution with a more balanced and inclusive representation and voting power. What is being proposed is too little and preserves developed country control over the IMF. It provides for a total increase of only 1.6 percentage points in voting share for developing countries, leaving developed, richer countries, which represent 15% of the membership of the IMF, with over 60% of the voting rights. To be genuine about sharing governance power in the allocation of votes, the increase should be much more substantial. Genuine governance reform in the IMF will not occur simply through marginal increases of voting rights. The real issue is how developing countries can have a stronger role in IMF governance and actually shape how the institution is run.

While it was this Government that invited IMF intervention and negotiated a dud deal for Ireland, many other states are powerless to resist the IMF. This must change. Sinn Féin recognises the debt burden on developing countries is a symptom of the disease that is at the core of the international financial institutions, namely the IMF. The voting rights in both these bodies are stacked in favour of the developed states and against the developing countries while the selection procedures for IMF leaders are totally undemocratic.

For too long the IMF has been able to impose its will, to dictate economic policies that ultimately strangle economic growth and impoverish millions of people. The IMF should be abolished with member countries focussing instead on building standards for just and responsible financing with regard to international lending and borrowing as part of new financial institutions under the control of a democratised UN.

Of the €67.5 billion in Ireland's bailout, €42.6 billion, almost two thirds of the total fund, will be drawn down by the end of 2011. Considering the bailout is over a lengthy period, will the Minister of State explain why the State is front-loading so much of the funding?

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