“Ireland is undergoing a painful adjustment as critical internal imbalances unwind.”

It’s still more art than science, but the IMF have issued a Public Information Notice [PIN] on Ireland’s economic fortunes – IMF staff report here [pdf file]. Whilst in the Irish Times, and on RTÉ, Finance Minister Brian Lenihan is accentuating the positive, the BBC report highlights the less than positive aspects – the Irish Times summarises the report here. A non-economist looks at the report, and an economist picks out a couple of points of interest on institutional reform. The message in the IMF Mission Chief to Ireland’s video seems to be that the IMF is not necessarily criticising the course the Irish government is taking, but they are warning of “the need to sustain this over a period of time.” [Adds Mick’s previous post is worth a look too]. From the IMF’s PIN

Directors welcomed the fiscal measures already taken, including significant and politically difficult cuts in public sector wages, and the authorities’ ambitious medium-term fiscal consolidation plans. The emergence of a large structural fiscal deficit—following the reassessment of the underlying balance—the rising public debt, and the fiscal burden from financial support to banks will require a sustained adjustment effort over several years. Directors stressed that the composition of consolidation efforts would be important in laying the foundation for a return to robust growth. They generally concurred that the focus should be on expenditure reduction, possibly including a further reduction of the public sector wage bill. A few Directors, while recognizing that fiscal consolidation is an imperative, cautioned that consolidation should not undermine efforts to arrest the economic downturn.