Business Irish

Sunday 23 July 2017

IMF chief predicts 'rapid recovery' from our crisis

Strauss-Kahn says growth will return when banks are fixed

IMF managing director Dominique Strauss-Kahn shakes hands with India's Finance Minister Pranab Mukherjee before their meeting in New Delhi yesterday
IMF managing director Dominique Strauss-Kahn shakes hands with India's Finance Minister Pranab Mukherjee before their meeting in New Delhi yesterday

Emmet Oliver, Laura Noonan and Charlie Weston

IRELAND'S economy can get "back on track'' very rapidly once the problems in the banking sector are dealt with, the head of the IMF predicted yesterday.

IMF managing director Dominique Strauss-Kahn said the €85bn package agreed for Ireland would fix the banks and ultimately the economy.

"I think the decision that has been made will fix the problems in the banking sector, and the Irish economy will come back on track rather rapidly," he said.

Speaking in India, Mr Strauss-Kahn said the crisis in Ireland was mostly coming from the banking sector.

The organisation also revealed yesterday during a press briefing in Washington that the IMF's €22.5bn loan to Ireland would have to be paid off ahead of all other loans, if Ireland ever got into difficulty.

The IMF loan would be ranked ahead of the EU, British, Swedish and Danish loans if a problem of repaying the loans ever arose, a spokeswoman confirmed. The IMF has "preferred creditor'' status, meaning its loan legally comes ahead of the other loans. Ireland has committed to repaying all the loans.

The Washington-based organisation said it was confident the opposition parties agreed on the overall targets in the plan and this impression was formed after meeting them over recent weeks.

An IMF spokeswoman said the organisation was quite used to dealing with countries who were in the process of changing government.

Meanwhile European Central Bank chief Jean-Claude Trichet last night insisted that his office had not strong-armed the Government into accepting the €85bn bailout agreed last weekend.

The comments came as the ECB supremo praised the bailout as the "best programme" to restore Ireland's prosperity.

Europe's most powerful banker was speaking last night after the ECB announced the result of its monthly deliberations on interest rates for the European area.

The ECB was one of the three international architects of Ireland's bailout, which also included input from the IMF and the European Commission.

Crucially, the ECB was billed as the agency that was most keen for Ireland to take a bailout, since our country's banks are being kept afloat with about €100bn of ECB money.

Bullied

Asked whether the ECB had "bullied" Ireland into taking a bailout, Mr Trichet replied: "It goes without saying that it was the decision of the Government of Ireland."

Mr Trichet also insisted that the deal struck with Ireland was the "best programme" to restore the country's fortunes.

"The programme is a programme that will work and will work effectively," he said.

"I am confident that the Irish people ... will prove what they have always proved in the past -- namely that they are able to cope with difficult periods."

Asked whether the bailout was in the interests of Ireland or in the interests of preserving the euro, Mr Trichet stressed that the ECB had to act in the interests of all "three hundred and thirty million people" who use the single currency.

"The euro currency is very credible and stable," he insisted.

Mr Trichet last night played down the international markets cool reaction to the Irish bailout. "It is always a matter of regaining confidence progressively," he said.

Irish Independent

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