AN OIREACHTAS Committee is to carry out an investigation into the lessons arising from the Government’s macroeconomic policies during the boom.
Minister for Finance Brian Lenihan last week wrote to the Oireachtas Joint Committee on Finance and the Public Service asking it to conduct the exercise over the coming months.
The Minister set out a number of areas which the Government considered should be covered by the investigation.
Mr Lenihan told the chairman of the committee, Michael Ahern TD, that he would be happy to make himself available to answer any questions it might have, “particularly in relation to the steps taken to manage the financial crisis up to and including the provision of guarantees to financial institutions at end-September 2008”.
Mr Lenihan said he intended to make available to the committee documents “which were prepared in the crisis management period”.
The Minister’s move came shortly after the Government indicated that it wanted to exclude its fiscal policy from the proposed terms of reference from the separate commission of inquiry into the banking crisis, a move that prompted strong criticism from the Opposition.
In his letter to Mr Ahern, the Minster said the Government felt the committee “should examine the key policy lessons in relation to macroeconomic management as set out in the Regling report”.
Mr Lenihan said that the key areas included “the need to mitigate, through fiscal and prudential policies, any mismatch between monetary conditions and the national business cycle”.
He also said the committee would have to examine “the appropriate management and surveillance of imbalances and risks that can build up in both the private and the public sectors of national economies in the euro zone”.
These would include external imbalances with regard to other euro-zone states and the way that those imbalances were funded, as well as “the design of fiscal policies so as to build in sufficient allowance for temporary revenues so as to avoid erosion of the tax base”.
Mr Lenihan added that the committee would also need to look at “the case for independent institutional sources for economic and fiscal projections and for national fiscal rules in due course”.
Mr Lenihan suggested the committee should set a deadline of September 15th for a report on how these lessons may be applied.