Failure of our leaders could bring in IMF, warns Power

IRELAND should hope for intervention from the International Monetary Fund (IMF) if does not get the political leadership it deserves, according to a leading economist.

Jim Power, chief economist with Friends First, said part of him would “actually welcome IMF intervention” because it has no political allegiances and would have no attachment to any sector of the economy.

“They just come in and they slash and burn, and if that’s the only way to get the public finances back in order then so be it, but I’d hate to have to test the theory,” he said.

Mr Power said it will be the political system that will determine if the IMF comes in or not. “If we politically fail to address the problems, if we continue to see a deterioration in public finances and the economy over the next few years, we should hope for an external influence.

“That external influence would either be with the German influence through the EU or the external influence through the International Monetary Fund.”

Mr Power said Ireland has an opportunity to correct the situation itself but if it does not then IMF intervention would be desirable but painful.

He pointed to Latvia where the IMF has come in and slashed public sector wages.

“That’s what the IMF would do if they came in and if we don’t do it, so be it,” Mr Power said.

The IMF recently lent €1.7 billion to Latvia. The primary purpose of the organisation is to provide financial assistance to countries that experience serious financial and economic difficulties using funds deposited with the fund from the institution’s 185 member countries.

Mr Power said confidence across the economy is still “extremely fragile”.

“I firmly believe that in an economy where confidence is so fragile that leadership is the minimum requirement needed to get people back to the business of doing business again.

“I think over the last couple of years we’ve been very poorly served on the whole political leadership.

“You need strong, decisive political leadership. You need a leadership that convinces you that there is a strategic vision for this country, not in the very short term but in the medium to long term,” he said.

The economist, who was speaking at a Cork Chamber breakfast briefing yesterday, said that he doesn’t believe the country has been getting this leadership but said it deserves it and needs it.


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