I welcome the Minister of State, Deputy Ossian Smyth, to the House.
Bretton Woods Agreements (Amendment) Bill 2022: Committee Stage
Sections 1 to 10, inclusive, agreed to.
NEW SECTIONS
Amendments Nos. 1 and 2 are related and may be discussed together by agreement. Is that agreed? Agreed. I understand that Senator Higgins has delegated Senator Gavan to propose and speak to the amendments in the group.
I move amendment No. 1:
In page 7, after line 36, to insert the following:
“Report on New Arrangements to Borrow intersection with existing obligations
11. The Minister shall, within 24 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining how he or she has sought to ensure that any conditionalities attached to credit provided through the NAB Decision support the achievement of the United Nations Sustainable Development Goals and the Paris Agreement, along with other international obligations the member may have in respect of human rights and social, economic and cultural rights.”.
I welcome the Minister of State. It is great to see him. At their core, both these amendments seek to ensure there is continuous assessment of how the new arrangements to borrow, NAB, decision is impacting on country's abilities to respond to challenges regarding climate, inequality and other issues.
Amendment No. 1 would require that within 24 months of the passing of this Act, the Minister would lay a report before both Houses of the Oireachtas outlining how he or she has sought to ensure that any conditionalities attached to credit provided through the NAB decision support the achievement of the United Nations sustainable development goals, SDGs, and the Paris Agreement along with other international obligations the member may have in respect of human rights and social, economic and cultural rights. There has been recognition that past International Monetary Fund, IMF, bailouts and rescue packages have undermined the ability of individual countries to respond to the pressing challenges of our time. The named international agreements here are something which we helped negotiate and signed up to in an effort to protect our planet and its people. We must ensure that the NAB decision is used in a way that promotes achievement of the SDGs and fulfils Paris Agreement obligations, including those under Article 2.2 of the agreement in respect of common but differentiated responsibilities. It must also empower countries to enhance social, economic and cultural rights. I look forward to the Minister of State's response on how he intends to engage on these issues.
I will briefly refer to amendment No. 2. It would require that within 24 months of the passing of the Act, the Minister would lay a report before both Houses of the Oireachtas outlining how he or she has sought to ensure the conditionalities attached to credit provided through the NAB decision does not require a member who has sought or received credit to engage in structural adjustment programmes or to pursue austerity as a national economic policy. We know from experience that structural adjustment programmes can cause extreme poverty and debt for global south countries, many of which have never recovered from slavery and colonialism. Jamaica is a very well known example of a country which has suffered greatly because of structural adjustment programmes. Just ten years ago, 20% of the Jamaican Government's annual revenue was being spent on debt repayments. These programmes which require countries to implement austerity and privatisation while amassing huge public debt have dire consequences for the ability of national governments to tackle poverty and inequality and increase access to education. These policies have real-life impacts and increase poverty and deprivation. For example, in Jamaica in 1990, 97% of children completed primary school. In 2013 only 73% did. In 1990, 59 mothers died in childbirth for every 100,000 children born. By 2013, that figure had increased to 110. There one can see clearly just how detrimental the impact of forced austerity measures have been on the people of Jamaica.
It is also essential that privatisation and the sale of public assets are not part of future IMF agreements. The Greek Government is in the process of selling its stake in a number of the country's largest ports. This is part of a much larger process of privatisation of state assets that was a key condition of Greece's bailout from the IMF following the recession. The selling off of state assets should not form part of any financial assistance agreements. Areas of climate and housing show how the selling off of public assets and infrastructure often means that countries cannot deliver key public services for their citizens. I look forward to the Minister of State's response.
I will begin on the broader issue of IMF lending and policy conditionality as both of Senator Higgins's amendments related to that. Conditionality has always been an integral part of IMF lending. Under its articles of agreement, the IMF is required to establish adequate safeguards for the use of its resources in order to ensure that loans to member countries are repaid as they fall due. This ensures that the IMF's resources will be available for other members who may be in need. The safeguards required under the articles of agreement include policy conditionality. For those unfamiliar with the concept, a country's government and the IMF must agree on a programme of economic policies before the fund can provide lending to that country. It is important to clarify that this is not simply a matter for fund staff and the borrowing country. The IMF's executive directors who represent all 190 members of the fund also have influence in the application of policy conditions. For those unfamiliar with the governance structure of the IMF, the board of governors on which the Minister sits, is the highest decision-making body of the IMF. However, in practice, the greater part of the decision making is entrusted by governors to the executive board. In the first instance, the fund's guidelines on conditionality, which set the parameters of the policy conditions applied to IMF lending, are reviewed periodically and approved by the board of directors. More importantly, however, the executive board is required to approve all IMF programmes. This means that executive directors have an opportunity to review the policy conditionality and financing package associated with the programme before granting approval.
Moving to the substance of the Senator's first amendments, specifically reference to the UN sustainable development goals, the SDGs, and the Paris Agreement, it is important to highlight the work that the IMF is doing under both frameworks. On the SDGs the IMF recognises the role that it, together with other multilateral financial institutions has to play in terms of policy advice, capacity development and financing for low-income and vulnerable countries. The fund has published a significant body of research on what is needed at a global, regional and country level to reach the SDGs. On the Paris Agreement, there has been growing awareness in the IMF of the macrocriticality of climate change and extensive research and policy advice are provided by the IMF.
In addition to the extensive research and policy advice provided by the IMF, efforts are also being made to integrate climate change into fund surveillance and to provide country-specific advice on the appropriate mix of fiscal and macro-economic policies to help member states address the challenges of climate change. In regard to the Senator's second amendment, it is important to consider the manner in which conditionality is currently agreed, implemented and assessed by borrowing countries and by the fund. I can certainly appreciate the Senator's concern about the overly rigid application of policy conditions by the International Monetary Fund, IMF, in the past. I agree on the importance of adapting conditionality to take account of the circumstances of members in need, including the causes of their balance of payment problems and their administrative capacity to implement reforms. On this point I am pleased to report that important lessons have been learned by the fund over the last decade. In particular, since Ireland's time in the programme, the IMF has analysed and internalised the experiences of borrowing members during the global financial crises. As a result, the fund has become more flexible in the way it engages with countries on issues related to structural reform. Borrowing members are now actively encouraged by the fund to take ownership of the design of their programmes. This means that the countries' authorities have primary responsibility for selecting, designing and implementing policies that will make the programme successful and help to overcome the problems that led it to seek financial assistance from the IMF in the first instances. In this respect, the IMF's conditionality system has evolved considerably in the last number of years. While I fully recognise the significant challenges that conditionality can pose for countries and their citizens in the short term, the overarching goal of these measures is to restore macro-economic stability and to establish the conditions for high-quality and sustainable growth. For these reasons, I do not propose to accept the amendments proposed by Senator Higgins.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 7, after line 36, to insert the following:
“Report on conditionalities attached to credit provided under New Arrangements to
Borrow
11. The Minister shall, within 24 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining how he or she has sought to ensure that conditionalities attached to credit provided through the NAB Decision does not require a member who has sought or received credit to engage in structural adjustment programmes or to pursue austerity as a national economic policy.
Amendment, by leave, withdrawn.
Section 11 agreed to.
Schedule agreed to.
Title agreed to.
Bill reported without amendment.
When is it proposed to take Report Stage?
Next Tuesday.
Is that agreed? Agreed.
Report Stage ordered for Tuesday, 11 October 2022.
Cuireadh an Seanad ar athló ar 7.15 p.m. go dtí 10.30 a.m., Dé Céadaoin, 5 Deireadh Fómhair 2022.
The Seanad adjourned at 7.15 p.m until 10.30 a.m. on Wednesday, 5 October 2022.