IMF Staff Reports

Released by the IMF:

There is lots of detail in both reports but it is likely most attention will focus on paragraphs 48-52 of the ex-post evaluation (though it’s all pretty much been said before).

10 replies on “IMF Staff Reports”

Seamus writes, regarding paras 48-52, that ‘… it’s all pretty much been said before…’

But not in such clear terms by the IMF. The bailout of unsecured and unguaranteed bondholders in banks totally bust, including banks already closed, using IMF money, looks as if it will never happen again.

The IMF hasn’t been much use really over the last 6 years. I mean, their models probably missed deflation as well. Do they think unlimited debt issuance is problem free as well ?

Some of the IMF figures look decidedly dodgy.

(1) They predict growth of 4.7% in GDP and 4.0% in GNP in 2014. But, both these would require a dramatic slowing-down in growth in Q4 2014. There is no evidence whatever that this happened. The industrial output figures for October and November showed an acceleration in growth. More likely estimates for growth in 2014 are 5.5-6.0% in GDP and 5.0-5.5% in GNP.

(2) They predict a sharp slowing-down in growth in 2015 as compared with 2014. Given the stimulus from the collapse in oil prices and tax cuts in 2015, neither of which contributed to growth in 2014, it is more likely than not that growth in 2015 will be higher than in 2014.

(3) They predict the fall in unemployment almost grinding to a halt, at 13.0% in 2013, 11.0% in 2014 and 10.7% in 2015. This seems very unlikely. Live register figures indicated the fall in unemployment was accelerating towards the end of 2014, not slowing down. It was already down to 10.6% in December 2014. So, for the IMF forecast to prove accurate, unemployment would need to rise in 2015 from its December 2014 level. Very unlikely. A figure in the range 8-9% is much more likely for the unemployment rate in 2015.

(4) It is also extremely unlikely that, with an election on the horizon, the volume of public consumption will fall in 2015, or that, with the 50% fall in oil prices, the rate of inflation will be higher in 2015 than in 2014 or that the current account surplus will fall by almost half between 2013 and 2015.


Must have slipped their mind to mention that ‘eric’ Invoice to Timmy Geithner for his €20 Billion Hibernian phone-call to Frankfurt back in the bond-holders hay-days in Para. 50.

p.s. A Shannon front-row remains on stand-by 24/7 to collect.

No it hasn’t been all said before and certainly not by an official organisation or member of troika!

In fact the lack of an official admission of the obvious has even led, in the past, to some commentators, not a million miles away from here, defending the actions of the ECB in relation to unsecured bondholders.

@ Colm McCarthy

” it’s all pretty much been said before…’”

The same pattern is repeated every time there’s a “black swan” in whatever field. Nobody pays attention and then it blows up and everyone is shocked.

“It was 1977, the year after a Belgian medical team led by the young microbiologist helped discover the virus behind a mystery illness that was killing hundreds of people in what was then Zaire. Some argued for a decisive international effort to diagnose patients and co-ordinate the kind of systematic response that could stop the disease in its tracks. Nearly four decades later, Prof Piot recalls sadly: “None of the recommendations were ever implemented. We have to avoid making the same mistake this time.””

People don’t think long term.

And bondholders were bailed out few years ago. Did they invest for growth ? Of course they didn’t. They expect to be bailed out next time as well.

The Irish media seem to be asleep at the wheel; again! Or maybe they can recognise a dead parrot when the see one.

Pat McArdle identifies in a blog comment the true figure of the cost of not bailing in unsecured bondholders at €5 billion.

The political question is, and remains, to what extent the concessionary financial arrangements agreed by the EZ meet the prejudice presumed to have been suffered. The IMF, of course, under the influence of its biggest shareholder, doe not do concessionary finance.

@ JohnTheOptimist

Note what the IMF said about the jump in tax avoidance related overseas “contract manufacturing.”

GNP should also be polluted in Q1 2015 with the completion of the Medtronic and Activis tax inversion deals.

The two groups that will become “Irish” will have 110,000 staff.

For me, page 32 of the Ex Post Evaluation says it all. A neat graph describes how German money was gradually withdrawn from Irish banks and the footnote (38) admits that the ECB refused to make an ex ante commitment to liquidity support for Irish banks. Imagine, the ECB was prepared to let Irish banks go under, even with the programme in effect and a clear policy (admitted in earlier paragraphs of the Evaluation) that bondholders were bailed out in order to stabilise European banks. Extraordinary!

I pointed out at the time that ireland was being asked to walk a high wire without a net but it is extraordinary to see it in print. This is what Trichet needs to admit and explain to the banking enquiry. To extend the circus analogy, he was the clown in the ring while Ireland was completely exposed.

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