Press release
Ministers McGrath and Donohoe welcome IMF assessment of Irish economy
From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
Published on
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From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
Published on
Last updated on
The Minister for Finance, Michael McGrath, and the Minister for Public Expenditure, National Development Plan Delivery and Reform, Paschal Donohoe, today welcomed the publication of the IMF’s annual review of the Irish economy, the Staff Report for the 2023 Article IV Consultation.
Ireland’s 2023 Article IV Consultation was set against the backdrop of Budget 2024, which sought to strike a balance between providing necessary supports to households and businesses, continuing to invest in public services and laying the foundation for sustainable public finances for the future, and that of a global economic perspective where there remains significant risks to the downside. These include higher for longer interest rates, low and uneven growth across the world, the challenges of climate change; and, increasing geopolitical tensions.
The Report sets out the views of IMF staff on the current position of the economy and identifies key structural factors that will have a bearing on domestic living standards in the years ahead. It notes in particular the resilience of the Irish economy and strong labour market, the assessment of Budget 2024; the establishment of the Infrastructure, Climate and Nature Fund, and Future Ireland Fund; Irelands ongoing extensive review of the Funds Sector; and, that Ireland is at the forefront of developing and operationalising a macro-prudential framework for non-banks.
Commenting on the Report, Minister McGrath said:
“I welcome today’s publication by the IMF, and its assessment that our economy has shown remarkable resilience in the face of recent consecutive shocks. This annual report by the Fund is a very useful economic stock-take, and helps shed light on our relative strengths and weaknesses.
"I note and share the Fund’s assessment of external risks, notably the continued risks of higher-for-longer inflation, and the economic impacts of geopolitical conflicts such as Russia’s war in Ukraine and the Israel-Gaza conflict.
"I note also the Fund’s view as regards Budget 2024, which struck an appropriate balance between mitigating the impact of the cost-of-living challenges on the society, meeting investment needs, and maintaining the provision of public services on one hand, and supporting disinflation and building buffers on the other.
"Finally, I welcome the Fund’s positive assessment and analysis of the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. These two savings funds are going to play a key strategic role in helping Ireland to contribute to issues such as our aging population, addressing climate change, adapting to the digitalisation of our economics, and to protect infrastructure spending during downturns and contribute to achieving carbon budget targets through capital projects.”
Minister Donohoe said:
“I welcome the IMF team’s engagement with my department throughout their recent two-week mission visit. The publication of their annual review presents a timely opportunity to consider the ongoing developments in our economy. I note the Fund’s recommendation that medium-term budgetary policy should continue to prioritise public investment while ensuring value for money and safeguarding fiscal sustainability. This echoes the government’s responsive approach to formulating budgets over the past few years and will inform our future plans.
"I agree with the IMF staff statements in relation to the importance of strengthening public investment efficiency and ensuring timely execution of the capital budget for the delivery of the National Development Plan (NDP). As the IMF note, Ireland is undertaking a large programme of reforms to enhance the capability of the planning system to provide timely decisions on investment proposals, and this work will continue into 2024 with the progression of the Planning and Development Bill and the revised National Planning Framework. Separately, my department is leading on a set of actions to boost public sector capability and wider construction skills and capacity through the Project Ireland 2040 Delivery Board. It is expected that all these reform measures will significantly boost the delivery of the NDP and the government will continue to provide regular updates to the public on this delivery.
"Finally, I share the Fund’s assessment of key structural issues, such as the need to further increase housing supply and to continue the implementation of measures to address climate change. Work is underway across Government to ensure continued progress on these priority issues.”
The Article IV process is a requirement for all members of the IMF and takes place on a periodic, usually annual, basis. It is a long-standing element of Ireland’s regular engagement with the IMF and has a medium- to long-term focus. This year’s review took place from 23 October to 3 November.
During an Article IV Consultation, IMF economists visit a country to discuss the country's economic and financial policies with government and central bank officials, as well as a range of public and private sector stakeholders. The team reports its findings to IMF management and then presents them for discussion to the Executive Board, which represents all of the IMF's member countries.
The 2023 IMF Article IV Consultation involved a small team of IMF staff visiting Ireland for a two-week period, during which they met the Minister for Finance, the Minister for Public Expenditure, National Delivery Plan Delivery and Reform, the Central Bank Governor, officials from various government departments and agencies, as well as a range of public and private sector organisations. A Concluding Statement was published at the end of the visit.