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

I will begin on the broader issue of IMF lending and policy conditionality as both of Senator Higgins's amendments related to that. Conditionality has always been an integral part of IMF lending. Under its articles of agreement, the IMF is required to establish adequate safeguards for the use of its resources in order to ensure that loans to member countries are repaid as they fall due. This ensures that the IMF's resources will be available for other members who may be in need. The safeguards required under the articles of agreement include policy conditionality. For those unfamiliar with the concept, a country's government and the IMF must agree on a programme of economic policies before the fund can provide lending to that country. It is important to clarify that this is not simply a matter for fund staff and the borrowing country. The IMF's executive directors who represent all 190 members of the fund also have influence in the application of policy conditions. For those unfamiliar with the governance structure of the IMF, the board of governors on which the Minister sits, is the highest decision-making body of the IMF. However, in practice, the greater part of the decision making is entrusted by governors to the executive board. In the first instance, the fund's guidelines on conditionality, which set the parameters of the policy conditions applied to IMF lending, are reviewed periodically and approved by the board of directors. More importantly, however, the executive board is required to approve all IMF programmes. This means that executive directors have an opportunity to review the policy conditionality and financing package associated with the programme before granting approval.

Moving to the substance of the Senator's first amendments, specifically reference to the UN sustainable development goals, the SDGs, and the Paris Agreement, it is important to highlight the work that the IMF is doing under both frameworks. On the SDGs the IMF recognises the role that it, together with other multilateral financial institutions has to play in terms of policy advice, capacity development and financing for low-income and vulnerable countries. The fund has published a significant body of research on what is needed at a global, regional and country level to reach the SDGs. On the Paris Agreement, there has been growing awareness in the IMF of the macrocriticality of climate change and extensive research and policy advice are provided by the IMF.In addition to the extensive research and policy advice provided by the IMF, efforts are also being made to integrate climate change into fund surveillance and to provide country-specific advice on the appropriate mix of fiscal and macro-economic policies to help member states address the challenges of climate change. In regard to the Senator's second amendment, it is important to consider the manner in which conditionality is currently agreed, implemented and assessed by borrowing countries and by the fund. I can certainly appreciate the Senator's concern about the overly rigid application of policy conditions by the International Monetary Fund, IMF, in the past. I agree on the importance of adapting conditionality to take account of the circumstances of members in need, including the causes of their balance of payment problems and their administrative capacity to implement reforms. On this point I am pleased to report that important lessons have been learned by the fund over the last decade. In particular, since Ireland's time in the programme, the IMF has analysed and internalised the experiences of borrowing members during the global financial crises. As a result, the fund has become more flexible in the way it engages with countries on issues related to structural reform. Borrowing members are now actively encouraged by the fund to take ownership of the design of their programmes. This means that the countries' authorities have primary responsibility for selecting, designing and implementing policies that will make the programme successful and help to overcome the problems that led it to seek financial assistance from the IMF in the first instances. In this respect, the IMF's conditionality system has evolved considerably in the last number of years. While I fully recognise the significant challenges that conditionality can pose for countries and their citizens in the short term, the overarching goal of these measures is to restore macro-economic stability and to establish the conditions for high-quality and sustainable growth. For these reasons, I do not propose to accept the amendments proposed by Senator Higgins.