Debt Crisis: IMF backs Ireland’s plans to reduce bank debt repayment
THE International Monetary fund, which is contributing to our €67.5bn bailout loans, has said that our overall debt position could be improved if we could renegotiate the terms used on the money borrowed to recapitalise the banks.
The stance backs that of the Government which has said a better deal on the €63bn used to recapitalise the banks by either extending the repayment dates or reducing the amount of interest accrued which would make recovery easier.
“The main thing that would be desirable would be to break this link between the sovereign and the financial system more effectively than has been done so far," Craig Beaumont, IMF's mission chief for Ireland.
"The prospects for the programme's success remain positive.”
The IMF also said further support for the economy from Europe would give the recovery plan a better chance of success.
And in report on our economic progress, it said a recovery would benefit overall European stability.
According to the IMF, Ireland has met the main budgetary and banking targets set out as part of the EU/IMF/ECB bailout programme but risks to the economy’s performance exists mainly because of the eurozone debt crisis and a weaker worldwide economy.
It said the Irish economy will grow by 1.1pc this year but lowered its forecast for next year to 1pc, down from 1.9pc after its last review due mainly to weaker export markets in the US and Britain.
However, the IMF also warns that the unemployment rate could remain above the 10pc mark up to 2016 while the economy remains “fragile”.
According to the report, the €12.4bn in budgetary measures planned for the 2012-2015 period will be an additional drag on growth, but "prospects for recovery should not be undermined significantly".
The IMF warns, however, that the Government's plans to increase tax revenue in the years to 2015 "will likely need to encompass income tax bands and credits".