Noonan warns of IMF-led cutbacks

 

The International Monetary Fund want "fundamental restructuring of expenditure and that's where they'll dictate, rather than on the specifics of the cuts", according to Fine Gael finance spokesman Michael Noonan.

"It's not like slicing a salami or cutting the end off a cucumber," he said.

During an interview on RTÉ's This Week programme, the Limerick East TD said the IMF "wouldn't probably specify a cut in the minimum wage but they'd say you have to get your labour market working properly.

"You have to do like they're doing in the UK and ensure that work is always more valuable than welfare. And by setting the headlines and by indicating serious expenditure restructuring in a certain area the Government implementing has very few options."

He believed a similar approach would be taken to public service reform. The IMF had no interest in "taking a few civil servants out" here and there. "They'll be looking for the dropping of programmes and a totally new way of delivering services to the public which will cost less with fewer people."

Mr Noonan also predicated a "very dramatic" announcement shortly by the IMF, based on the way they operated in other countries.

He believed the first line of intervention by the IMF and other EU institutions would be the banking system rather than the Government's four-year budgetary plan and restructuring "which could be done very quickly" would be dealt with before any further further.

The Fine Gael finance spokesman noted the change of language used by Minister for Finance Brian Lenihan. "The word recapitalisation has now disappeared from the Minister's vocabulary and it's all about restructuring and restructuring the sector. It's a far wider concept."

He suggested the IMF might follow the "good bank bad bank" formula used in the US where the good bank traded and took deposits and bad bank took the liabilities. "It also took the creditors who had lent them money with senior debt and they had to work out their situation over years to get what they could out of it."

Mr Noonan said that "at the conclusion of the talks there has to be a memorandum of understanding which sets out in detail everything that's agreed" and in Greece that included quarterly reviews so that if the Government "fails to make the adjustments the IMF can intervene on a quarterly basis and bring them back on track". That clearly showed "who's in charge".

Sinn Féin's Caoimhghín Ó Caoláin said the Coalition has no authority to load more debt on the state and called on them to resign.

“The cost is to be savage and widespread cutbacks that will plunge large sections of the Irish people into poverty,” Mr Ó Caoláin said.

“If they are not savage enough for the IMF and the EU they will be deepened further. Social supports, public services and jobs will be devastated if this proceeds,” he said.