Fiscal Treaty will NOT lead to permanent Austerity

austerity
austerity (Photo credit: 401K)

One of the mains arguments being used by the No side to the Fiscal Compact Referendum is that this treaty will lead to permanent austerity.

A senior IMF official has said that adopting the fiscal treaty does not mean permanent austerity, the complete opposite!

Speaking after an event in Brussels, IMF deputy divisional chief Xavier Debrun told reporters that once a government had a more balanced budget situation then belt-tightening was no longer necessary.

Mr Debrun said the treaty simply meant that governments adhered to “common sense” housekeeping rules.

He said Ireland passing the fiscal treaty would improve the country’s chances of returning to the international markets to borrow.

Mr Debrun said: “Fiscal rules are about fiscal responsibility, the fact that over the long-term governments make sure that on average they can pay for the policy measures they implement. This is just common sense.

“This is called the budget constraint: you are subjected to it, I am subjected to it, the government is subjected to it.”

Mr Debrun said austerity was caused by governments ignoring the budget constraint and then being faced with fiscal shocks which required belt-tightening.

He said: “The belt-tightening is the austerity, but you do not have to tighten your belt forever, obviously.”

This is what the Yes Campaign has to get across. The Fiscal Compact is formalising rules we have been subject to since the Masstricht Treaty, the Growth and Stability Pact, the Six Pact and now the Fiscal Compact. If those treaties and pacts were about permanent austerity, why did we not have it since 1992?

Its time we got real with our finances and learned to live within our budget, just like every other household, business and country.

Author: Stephen

Cork born and bred, proud European and Irishman. Involved in many organisations and politics. Also writes for SpirtualityIreland.org and UCC Express.

3 thoughts on “Fiscal Treaty will NOT lead to permanent Austerity”

  1. But… but… We shouldn’t be paying this money back ANYWAY!! Yes, we shouldn’t have been so lavish and blindedly stupid with our sudden flood of falsified wealth, but the German et al. bankers took a risk, and they LOST! When I lost over 40% of my shares I didn’t go charging off to the relative companies demanding my money back, but maybe I should have if everyone else is getting away with it.

    I thought ‘common sense’ – an old, mystical notion – was enough to realise that someone earning €30,000pa couldn’t pay back a mortgage of €500,000 in even 30 years. Seemingly not. Over 350m people need hand-holding.

    Why didn’t we do what Argentina did in the early 00s? Argentina are now experiencing higher growth than most world leaders have done in the last century. Employment is higher than ever. Poverty lower than ever. Their policies turned away from banks and capitalist notions for a more socially-supportive structure. Sounds almost too good to be true…

    1. Im not getting into an argiment over the guarentee, but it happened and we have to live with it. Yes Argentina did well at first but is struggling again, but it had the advantage of it’s own currency. We don’t. We can’t take the drastic action that they took.

      Just read this on Argentina Thank You, Argentina

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