Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

The Bill was published on 11 March and passed Final Stage in Dáil Éireann on 21 September. In the Dáil, there were two Government amendments to the Bill, which were unopposed and related to a technical matter concerning previous contributions to IMF trust funds. On 30 September 2021, the Chairman of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach wrote to the Minister for Finance to confirm the committee had agreed to accept his request for a waiver, confirming it did not wish to undertake pre-legislative scrutiny of the legislation.

In the broadest sense, the objective of the Bill could be characterised as augmenting Ireland’s role in, and support for, the International Monetary Fund, IMF. The Bill will achieve this in two ways. The first is by providing for Ireland’s adherence to the IMF's new arrangements to borrow, NAB. The NAB is an arrangement under which the IMF's economically strong member countries provide loans to the fund to supplement its resources in times of great need. Second, the Bill will allow for grant contributions to IMF trust funds, both those that currently exist and new trust funds yet to be established, in addition to funding capacity-building and technical assistance. Trust funds are an integral part of the IMF's provision of debt relief and concessional financing to vulnerable, low-income countries that have to deal with a range of challenging issues. Finally, the two amendments to the Bill on Report Stage in the Dáil have been incorporated in the draft Bill of which Senators have a copy. These are intended to rectify an issue that arose earlier this year regarding the transfer of Ireland’s share of two IMF accounts for the purpose of funding debt relief in Somalia and Sudan in 2020 and 2021, respectively.

I will now set out the main provisions of the Bill, which comprises 11 sections and one Schedule containing the text of the NAB decision. Section 1 sets out the definitions used in the Bill.

Section 2 provides for the approval of the terms of the NAB decision and Ireland's adherence to, and participation in, the NAB decision. This section also empowers the Minister for Finance to consent to future amendments to the NAB decision on behalf of the State, subject to a Government decision and to consultation with the Central Bank. It was considered necessary to include this provision given that the NAB decision is periodically renewed by the IMF.NAB participants are consulted during this process. The terms and the conditions of the renewed NAB are subject to the approval of all participants.

In the case that the IMF makes a call on the NAB, the Central Bank of Ireland will provide the loan on behalf of Ireland. As such, section 2 grants the necessary powers to the Central Bank to perform the obligations and exercise the rights arising from Ireland's adherence to the NAB decision. It also clarifies that any moneys received by the State under the terms of the NAB decision, that is, the repayment of any loan provided under the NAB, should be directed to the Central Bank, which provided the credit in the first instance.

Section 3 provides that in cases where amendments to the NAB decisions are approved by Dáil Éireann, a notice of this approval is published in Iris Oifigiúil.

Section 4 provides for a ministerial guarantee to cover the Central Bank's participation in the NAB on Ireland's behalf. It also requires the Central Bank to submit an annual report on the use of ministerial guarantees relating to the NAB decision to the Minister for Finance. This statement will be incorporated into the annual report on Ireland's participation in the IMF and World Bank, which is laid before both Houses of the Oireachtas each year in accordance with section 10 of the Bretton Woods Agreements (Amendment) Act 1999.

Section 5 relates to IMF trust funds. Specifically, it concerns an existing trust fund called the catastrophe containment and relief trust, CCRT, which allows the IMF to provide grants for debt relief for the poorest and most vulnerable member countries in certain circumstances. Section 5 provides for the payment of grant contributions by the Minister for Finance to the CCRT up to an aggregate total of €50 million. All proposed payments to the CCRT will be subject to a resolution by Dáil Éireann.

Section 6 sets out the mechanism by which grant contributions may be made to existing IMF trust funds as well as those yet to be established. Any proposed contribution to a trust fund that has not been specifically legislated for previously will require a ministerial order followed by a resolution of Dáil Éireann. Like the CCRT, payments up to an aggregate total of €50 million may be made to each individual trust fund. Recent examples of trust funds established by the IMF include the resilience and sustainability trust, which will focus on longer-term structural challenges, including climate change and pandemic preparedness and the administered account for Ukraine.

Section 7 provides for a payment from the Central Fund to the Central Bank of Ireland in respect of transfers of Central Bank resources to the IMF administered account for Somalia and the IMF administered account for Sudan up to a total of €6.6 million. This follows a finding by the European Central Bank that a portion of Ireland's contribution to debt relief for Somalia and Sudan in 2020 and 2021, respectively, contravened the EU treaty prohibition on monetary financing. The ECB has instructed all affected member states to take corrective action. This provision will satisfy that requirement by providing a legislative basis for repayment to the Central Bank. This section constituted the Report Stage amendments in the Dáil.

Section 8 amends section 3 of the Bretton Woods Agreements Act 1957 to provide for the payment of grant contributions to the IMF trust funds, and to reflect the fact that the ESAF Trust has been renamed the PRGT, which stands for the poverty reduction and growth trust. The section also amends the Bretton Woods Agreements (Amendment) Act 1999 to replace the definition of the ESAF Trust with the definition of the PRGT, and to increase the total aggregate amount that may be paid to the PRGT to €75 million. The PRGT, like the CCRT, is a crucial part in the IMF's support for low-income countries and provides concessional financing to eligible members. Ireland has provided grant contributions totalling almost €25 million to date to the PRGT.

Section 10 repeals section 163 of the Finance Act 2010. This was intended to amend the Bretton Woods Agreements Act 1957 to provide for a borrowing agreement between Ireland and the IMF. As Ireland's 2010 borrowing agreement with the fund lapsed without taking effect, section 163 of the Finance Act 2010 is redundant and so a repeal is in order.

Section 11 is a standard section defining the Short Title of the Bill.

This is quite a technical Bill and I understand some of the references and concepts may be unfamiliar to Senators. Fundamentally, the legislation before the House today aims to bolster the IMF in its work to foster economic stability and global growth. The active support of economically stronger members, including Ireland, to ensure the fund has adequate resources is crucial to the IMF's credibility and effectiveness as we face an uncertain future.

As Members of the House are aware, the risks to the global economy remain overwhelmingly tilted to the downside, such as the devastating impacts of Russia's war in Ukraine, increasing energy and food insecurity, the possibility of a resurgence of the Covid-19 pandemic and associated disruptions, high and unsustainable sovereign debt burdens, and potential negative spillovers from monetary policy tightening in advanced economies, to name just a few. The confluence of these factors could create large and urgent financing needs over a relatively short period. Unfortunately, we have seen this play out in a number of countries recently, including in Argentina and Sri Lanka. Furthermore, as the world remains highly interconnected and vulnerabilities can spread more easily across sectors and national borders, the risk of systemic stress has increased over the medium term. This is a particular problem in low to middle-income countries, especially those already subject to climate change and conflict. The financial assistance provided by the IMF plays a vital role in addressing macroeconomic problems, limiting disruption to both the domestic and the global economy, and helping to restore stability and growth. It is important to ensure the IMF is well resourced and in a position to provide assistance to those member countries in times of difficulty. The Bretton Woods Agreements (Amendment) Bill is Ireland's contribution, as an economically strong member of the IMF, to support the fund in its work.

I look forward to hearing the views of Senators on this Bill and commend the Bill to the House.