IMF austerity policies imposed in the Global South undermining Ireland’s aid budget and progress on education

A new paper, published today by ActionAid Ireland and the four leading Irish teachers’ unions, highlights how the International Monetary Fund’s (IMF) austerity policies are damaging global progress on education – and undermining Ireland’s overseas aid investment.

In 2021, 7% of Ireland’s aid budget, or €37,002,000, funded education work globally and Ireland is recognised by the Global Campaign for Education as a role model in terms of the quality of its aid to education. Ireland also just increased its overall aid budget to €1.2 billion. However, the paper highlights how IMF dogma on imposing austerity and cutting public services, including cutting funding for teachers, undermines this aid.

The paper, based on extensive research in 15 countries, shows that IMF austerity policies undermine public services, human rights and the achievement of the Sustainable Development Goals. This trend is likely to continue until at least 2025, when 75 per cent of the global population (129 countries) could still be living under austerity. At least 69 million more teachers are needed by 2030 to achieve Sustainable Development Goal 4 for inclusive and equitable quality education. However, the IMF continues to advise low-income countries to cut their wage bills and reduce teachers’ pay and the number of teachers. This not only undermines this aid from Ireland, but also the right to education in these countries.

ActionAid Ireland, the Irish National Teachers’ Organisation (INTO), the Irish Federation of University Teachers (IFUT), the Association of Secondary Teachers, Ireland (ASTI) and the Teachers’ Union of Ireland (TUI) are calling on the government to recognise that in order to deliver its important focus on education, Ireland needs to challenge austerity from the IMF and ensure its own policies and strong commitment to education are not undermined.

Karol Balfe CEO ActionAid Ireland said: Education is a powerful tool for breaking the cycle of poverty. Educating girls specifically has enormous and far-reaching benefits, including reducing rates of child marriage, promoting healthier and smaller families, improving wages and jobs for women, and empowering women to become leaders at community and government levels. These austerity policies impact on the right to education and undermine progress made in education. Aid is important, but equally important is challenging macro-economic dogma that undermines the right to education for millions.”

Michael Gillespie, General Secretary of the TUI said:  “The suggestion that you need to cut spending on teachers to improve education makes no sense to anyone working in the education sector. Nothing is more important for quality learning than a quality teacher.”

John Boyle, General Secretary, of the INTO said: “Although we don’t work in a low-income country, we are well aware of the impact of austerity on teachers’ salaries bearing in mind how our members incomes were slashed by successive governments during the last recession. Austerity is a failed policy, with a wide body of research demonstrating the damage this policy imposes on education systems. It must be challenged.”

Kieran Christie, ASTI General Secretary said: “Education is the catalyst for the achievement of all 17 Sustainable Development Goals. Irish development aid rightly prioritises education and is a generous donor to the Global Partnership for Education. Ireland must defend education and advocate for increased funding for education. Moreover, such funding must be directed towards ensuring a quality teaching workforce. The latter requires quality teacher education, a proper salary structure and working conditions which respect teachers’ professional autonomy and practice.”

Read the full Education Versus Austerity paper here.

The paper is based on earlier international research, The Public Versus Austerity, published by ActionAid, Education International and Public Services International, which shows that public sector wage cuts continue to be recommended by the IMF and by Ministries of Finance who adhere to the same neoliberal ideology and economic policy. The research is based on reviewing 69 IMF documents from 15 countries, discussions with IMF economists and a literature review on public sector wage bills.  

The research across 15 countries revealed that:

  1. Despite IMF claims that public sector wage bill containment was only ever temporary, all of the 15 countries studied were given a steer to cut and/or freeze their public sector wage bill for three or more years, and eight of them for a period of five or six years.
  2. In just those 15 countries, the recommended IMF cuts add up to nearly US$ 10 billion –the equivalent of cutting over 3 million primary school teachers.
  3. In just those 15 countries, a one-point rise in the percentage of GDP spent on the public sector wage bill would allow for the recruitment of 8 million new teachers.

ActionAid Ireland, the ASTI, the TUI, the INTO and the IFUT recommend that:

  • Ireland has had a welcome and progressive focus on education globally as the catalyst to delivering the SDGs. Ireland must ensure that this policy is not undermined by the role of the IMF. In their engagement with the IMF, The Department of Finance and Irish Aid should focus on policy coherence in relation to our development policy and engagement with the International Finance institutions, questioning in particular the logic and rationale behind promoting austerity policies.
  • Ireland ought to carry out a gender and human rights impact assessment on austerity policies in the countries that we support through development aid.
  • Ireland should make a commitment to the goals of the UN’s 2022 Transforming Education Summit and support the actions for Track 5 on the Financing of Education.
  • Ireland should continue to champion education in its aid budget.

Photo caption: Jeniffer is a teacher in Malindi, Kenya. Photo credit: Esther Sweeney / ActionAid

Protesters holding End Fossil Fuels banner at a climate demonstration, advocating for renewable energy solutions.

Protestors at COP 28 in Dubai. Photo: Konrad Skotnicki.

Climate protest with diverse crowd holding signs about environmental action in a city square.

Belfast Climate Change March, 2019. Photo: Trócaire.

The Profit Driving the Crisis

Despite their overwhelming contribution to global emissions, fossil fuel companies continue to attract significant financial backing—driven by their enduring profitability. This is starkly illustrated by the case of ExxonMobil, the top fossil fuel investment held by asset managers based in Ireland. In 2023, ExxonMobil reported €33.63 billion ($36 billion) in profit. That is almost twice the GDP of Botswana (€18.1 billion) and nearly three times Namibia’s GDP (€11.5 billion).

Ireland plays a hugely disproportionate role in facilitating investments into fossil fuel companies like ExxonMobil. In 2023, the investments made into fossil fuel companies by investment managers based in Ireland generated an estimated 72.5 million tons of CO2e. This is more than the CO2e emissions for the entire country of Ireland—and more than ten times that generated by Sierra Leone.

The Global Human Impact

The climate crisis is here, now, and it is causing disproportionate harm in the Global South. In Bangladesh, rising sea levels and increasingly severe cyclones are displacing coastal communities, with projections indicating that 17% of the entire country could be underwater by 2050. The legally binding Paris Agreement on climate change explicitly acknowledges the importance of tackling private finance. Its three overarching goals are: keeping below 1.5C of warming; increasing adaptation and making finance flows consistent with low emissions and resilience.

This gives a clear mandate for action:  both tax reform and corporate regulation are needed to tackle financial flows, and both nationally in Ireland and at EU level, ‘polluter pays’ taxes are lacking and regulation of the financial sector remains weak and fragmented. While EU regulation exists, it is designed more to nudge investors toward more sustainable investment practices by increasing transparency and reporting levels than to enforce strict standards. And it is moving in the wrong direction: the recently passed EU Corporate Sustainability Due Diligence Directive excluded investments; and now the EU Commission’s Omnibus legislative proposal threatens to undo the limited gains made on climate plans, as well as blocking future attempts for stronger action at national level.

The Risk of Inaction

Fossil fuel investment is too profitable to remain weakly regulated. If Ireland continues with its current strategy of encouraging FDI at all costs, and relying on weak EU regulation, we are headed for catastrophe. The Inter-governmental Panel on Climate Change has repeatedly warned that every fraction of a degree beyond 1.5°C brings irreversible consequences: collapsed ice sheets, vanishing coral reefs, and extreme weather events that will make vast regions of the planet uninhabitable. And yet, companies are developing oil and gas fields that could push global warming beyond 2°C.

Our research found that 91% of the investments made into fossil fuel companies by investment managers based in Ireland were to companies that have plans for fossil fuel expansion like these. Ireland cannot afford inaction on this issue.

About This Research

The figures in this report regarding investment from Ireland are based on new research commissioned by ActionAid Ireland and Trócaire. In the paper, we uncover the scale of fossil fuel investment through Ireland, who the investors are, and in which fossil fuel companies they are investing.  We analyse the current regulatory framework and explain why it is inadequate—and moving in the wrong direction. And we make specific recommendations for change, which are summarised below.

Summary of Recommendations

Regulate the private financial sector
Ireland must end its outsized role as an enabler of destructive fossil fuel investment. Ireland should introduce a strong gender-responsive national human rights and environmental due diligence framework which includes the regulation of investors with respect to human rights and the environment and climate. The transposition of the EU Corporate Sustainability Due Diligence Directive could achieve this if downstream activities are included and the Omnibus proposal is rejected. Ireland should prohibit investments in fossil fuel expansion and require investors to implement climate transition plans consistent with a 1.5°C climate limit.

Endorse the Fossil Fuel Non-Proliferation Treaty
Ireland should endorse developing a Fossil Fuel Non-Proliferation Treaty to curb fossil fuel expansion and commit to a fair and funded phase out of fossil fuels.

Support tax justice
Ireland should support bold and fair new global tax rules through the UN Framework Convention on Tax, should adopt all OECD BEPS measures, and should conduct an updated and comprehensive spillover analysis of its tax policy. Ireland should take coordinated action globally, at the EU level and domestically to introduce a range of new taxes to mobilise finance needed for climate justice, based on ‘polluter pays’ and social equity principles such as wealth taxes for the highest earners, climate damages tax on investors, fossil fuel production taxes and levies on aviation and shipping.

Finance a just transition
Ireland must also meet its fair share climate finance obligations under Article 9.1 of the Paris Agreement, and pay our ecological debt to the Global South. Ireland should support conditionality-free debt cancellation for countries on the front lines of the climate crisis, commit to a new UN Framework Convention on Sovereign Debt, moving debt negotiations from the IMF to the UN, and to a debt workout mechanism that is fully representative and fair.

Further reading