Month: March 2012

IMF Fifth Review

The fifth review of the Extended Arrangement with Ireland can be read here.  The debt sustainability analysis on pages 35-40 shows little changes from that provided in the Fourth Review.

The Baseline Scenario is identical and extends to a projected gross debt ratio of 109% of GDP in 2017 (net debt 101% of GDP).  The growth shock shows that if annual growth is close to zero (0.1% per annum) the debt would be 138% of GDP in 2016 and still rising.

The performance criterion for the end-June 2012 Exchequer Primary Balance remains €9.0 billion.  The outturn to the end-June 2011 was €8.4 billion.

Page 9 shows that we had a €4.3 billion budget last December once the full effect of tax carryover effects are included.

The budget implies a consolidation effort of €4.3 billion (2¾ percent of GDP) in 2012—including the full €1.1 billion carryover from 2011 tax measures—which significantly exceeds the €3.6 billion effort originally programmed.

Box 3 (page 20) on Social Welfare: Scope for Reform is also noteworthy.  The four paragraphs in the section begin:

The Irish state provides significant support to low-income groups.

This protection has come, however, at a high fiscal cost.

Importantly, the current system generates poverty traps for some groups, while providing less targeted support to others.

Potential reform options include moving toward more a means-tested and integrated approach to social welfare payments.

UPDATE: The transcript of the conference call with Craig Beaumont, IMF Mission Chief for Ireland can be read here.  There is also a separate short interview from the IMF Survey Magazine here.

MyHome\Irish Mortgage Brokers Report

Here‘s a link to an interesting report by Karl Deeter and Frank Quinn on the current state of the Irish residential property market, using data from MyHome.ie and the Allsop\Space auctions.

Research Prioritisation Report

According to an Irish Times story by Dick Ahlstrom and Fiona Reddan the government has approved the report of the Research Prioritisation Steering Group in identifying 14 priority areas for state-funded research. The report itself is here.

One might hope (though probably in vain) that this would prompt some wider debate. For example, might at least some policy makers be even slightly concerned to question:


  • the merits or otherwise of an increasingly centralised model of state planning for innovation,
  • the continued privileging of scientific and technological knowledge which current policy advances,
  • the extent to which the relentless shift towards commercialisable state-funded research is in conflict with a core original rationale for this policy: namely the provision of public goods—those which are by definition not commercialisable (current policy can look a lot like socialising the costs, while privatising the benefits), and:
  • the further opportunities for rent-seeking, by both industry and academics, this sort of exercise creates and embeds, and relatedly, the high political value thereby assigned to demonstrating (by innovators, no less!) compliance with hierarchy, obedience to instructions and the uncritical acceptance of a consensus policy, aka ‘groupthink’?

RTE: Nation to Be Spared From Promissory Note Deal

RTE’s Nine O’Clock news are reporting Enda Kenny as explaining that promissory note negotiations are totally separate from the question of will the Irish people vote for the Fiscal Compact Treaty and that the Irish people will not bribed to vote for the Treaty.

RTE also noted that the latest Council meeting was “dominated by jobs and growth” which sounds like great news. And, best of all, reporter Tony Connelly helpfully explained that it was now felt that asking for a better deal on promissory notes was actually a bad idea because it would send a bad signal to financial markets that we were not able to cope with our debt burden and that there was no way this issue would be dealt with any time before the summer.

Ok, so be it. But I suspect that “the Irish people won’t be bribed” may prove to be the worst referendum slogan in history.

More on Fiscal Devaluations

This blog has recurrently featured the role of fiscal devaluations inside a currency union –  a good summary of the argument is here.  (HT Desmond Brennan).  There are traces of this in the Irish case (the increase in VAT and the reduction in employer PRSI for low-paid workers) but more could be done.