Troika ‘did not consider bailout effects on public’
“You need to bring the people with you and that is very difficult. This is year seven of austerity and people are getting weary. You only have one life to live and, if a decade of that is taken out by bad economic management, people lose heart,” said Mr Noonan at a conference in Dublin Castle organised by the International Monetary Fund (IMF).
He said one of the main lessons to be learned from Ireland’s bailout is that the programme needs to be flexible. The Government asked the troika to change elements that were not working, said Mr Noonan.
He did not identify these policies, nor whether it was the IMF, EU Commission or ECB that refused to make the requisite changes.
“We tried to renegotiate some parts, but some people dug their heels in.”
As a result of this focus on debt reduction and fiscal discipline, electorates throughout the EU are more willing to embrace extreme-left and right-wing parties, he added.
IMF managing director Christine Lagarde said that “protection of the poor” had to be the cornerstone of any programme.
However, it was up to each individual government to decide on what mix of spending cuts or tax hikes should be implemented to restore fiscal stability. The two-third spending cuts and one-third tax increases that had been the rule-of-thumb in Ireland and other bailout countries had been the most successful, she said.
“The true heroes, the ones who have really taken the brunt, are the people of Ireland and their representatives. It has been a very hard journey. It has taken a toll. Many people have been made unemployed, but we are now seeing, certainly the numbers, in day-to-day life, the results of this period of time.”
Moreover, it was very important that whatever policies that were adopted had to ensure that future economic growth was not threatened, she added.
“Unemployment numbers are much better. The growth number is outstanding and will be in the vicinity of 5% and still probably one of the highest in Europe next year. The deficit has been nearly halved over that time, so it gives strength and hopefully stability, which is critical for the economy to continue to recover and for investors, whether they are households, SMEs or big corporates, to invest and develop activity to create value and jobs in this country.
“This issue of stability is critically important, once all this work has been done and all this work has been undertaken, so they are not in vain, they are not wasted but they are capitalised upon in order to create more jobs.”
