Department of Finance, Dublin

A leading Irish academic says that the International Monetary Fund will have to take over the Irish economy unless the Government changes its policy.

Ray Kinsella, Professor of Banking and Finance at the Michael Smurfit Graduate School of Business, said that Ireland is at a crossroads and control over the economy is slipping out of Irish hands.

"On present trends and in the absence of a transformational change policy, the IMF will be called upon to intervene with its own particular brand of orthodoxy,” he said. “We should no longer be surprised at this clear and imminent possibility: the IMF is now an integral part of the EU’s adjustment and financing system.”

Kinsella said that the problem was one of a crisis of credibility in relation to the government’s management of the economy.
He also pointed out that the upcoming budget is unlikely to solve anything.

"We can continue – at least for a short time – as we are. The Government had indicated that the forthcoming budget will take another €3 to €4 billion out of the economy. This is utterly wrong,” he said. “We now have had four such budgets.”

Kinsella also noted that, going into the fourth austerity budget, our economy is smaller, our national debt is higher, our public finances are more strained and that we have not begun the process of rebuilding our economy. Meanwhile, the number of unemployed people in the country was now headed for 500,000.

"This particular road is not a long one,” he said. “It is leading straight down a cul de sac to IMF intervention.”

"We simply cannot ‘cut’ our way out of this recession,” he continued. “We can only commence the process of fundamentally rebuilding our economy. This will take time and, above everything else, we need to tell this straight to the EU.”

A spokesperson for the IMF, however, said that the agency "does not envisage that any IMF funding will be required for Ireland."