The Annual IMF Article IV Mission took place, virtually, over a two-week period from Monday, 26th April to Friday, 7th May 2021. During the Mission, an IMF team of economists assessed Ireland’s economic and financial developments and discussed the country’s economic and financial policies with Ministers Donohoe and McGrath, the Central Bank Governor, officials from Government Departments/Agencies and the Central Bank, the IFAC, the ERSI, Oireachtas members and representatives of the private sector. Discussions were constructive and engaging.
Ministers Donohoe and McGrath welcomed the IMF’s view that the Government implemented a swift and comprehensive policy response that has been effective in mitigating the impact of Covid-19 on the economy that protected households and businesses. As noted in the Statement, Ireland is the only EU country with positive GDP growth, however, the Ministers noted that many challenges remain as Ireland begins to emerge from the pandemic.
Challenges include post-Brexit trade arrangements, potential changes in international taxation, reducing the country’s deficit and national debt, getting people back to work and assisting those who need to reskill. All of these will be addressed against the planning for a careful and considered withdrawal of the pandemic support measures, when appropriate.
The IMF Concluding Statement also highlights that there is much still to be done in the areas of housing and climate action, which are areas of priority for the Government. The need for improved efficiency in our public expenditure has already been acknowledged by the establishment of the National Investment Office, and work continues in these areas with the ongoing Spending Review and Performance Budgeting processes.
On conclusion of the Mission, Minister Donohoe said: ‘The worst of the pandemic now appears to be behind us. Our vaccination programme is progressing well and this will allow for further easing of restrictions over the summer. This should drive a rapid economic rebound in the months ahead, with consumer spending leading the way. Government will continue to support households and firms, and this support will evolve as the situation progresses; they will be more tailored and more targeted to those workers most in need and to viable, but vulnerable, firms’.
“Beyond the immediate recovery, we must now start to think about addressing the longer-term structural issues within the economy, including Ireland’s ageing population. While currently quite favourable, the demographic structure of our population is set to change significantly over the coming decades. We must also consider issues such as the financing of Ireland’s transition away from fossil fuels to a low carbon economy. The scale of the climate change challenge is very significant and will involve transformative change for all sectors of the economy. Finally, I want to acknowledge the insights of the IMF. We had fruitful (virtual) discussions and I look forward to the report being published over the summer.”
Minister McGrath said: ‘With the economy starting to reopen as the vaccine rollout continues, Government is committed to supporting society and the economy to recover from the impact of the pandemic. As the IMF notes, this will require that the unwinding of support measures be tapered and gradual to avoid a cliff-edge. Key requirements for an inclusive and sustainable recovery noted by the IMF, including upskilling and investment, are priorities for Government. The Government’s focus on upskilling will allow us to address the challenge that as we emerge from the pandemic, many of the jobs of the future will be different. The review of the National Development Plan that is underway will set new five year rolling Departmental capital allocations and overall ten-year capital ceilings out to 2030. This will support delivery of priority commitments for Government, also highlighted by the IMF, including action on climate change and the provision of sustainable housing’.
Both Ministers look forward to the publication of the IMF Article IV Report in mid-June which will contain a more detailed analysis of the Irish economy.
ENDS
Notes for editors
A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘Mission’), to a member country.
During an Article IV consultation, an IMF team of economists visit a country to assess economic and financial developments and discuss the country’s economic and financial policies with Government and Central Bank officials. IMF staff Missions also often meet with representatives of the private sector, unions, parliamentarians and financial institutions. The team reports its findings to IMF management and then presents them for discussion to the Fund’s Executive Board, which represents all of the IMF’s member countries. A summary of the Board’s views is subsequently transmitted to the country’s Government. In this way, the IMF aims to ensure that the views of the global community and the lessons of international experience are brought to bear on national policies. Summaries of most discussions are released in press releases and are posted on the IMF’s website, as are most of the country reports prepared by the staff.