IMF tells State to stick with austerity policy Ireland making steady progress, says Chopra
THE International Monetary Fund has said the Government should continue the present austerity drive -- despite some politicians saying that a previous report by IMF researchers proved that austerity is not working.
The Washington-based think tank said the pace of austerity "is appropriate and that a number of other factors have also proven to be a drag on growth".
Research published by the IMF's chief economist Olivier Blanchard with Daniel Leigh earlier this month seemed to suggest that it had miscalculated the effect of austerity on the economy and led some economists to suggest that austerity would not work in Ireland.
The new comments, which were placed on the IMF's website over the weekend, were signed by Ajai Chopra, the IMF official who has overseen the fund's bailout of Ireland and the IMF's deputy director for Europe. It blames "overburdened bank, household and SME balance sheets" and "weak growth in trading partners" for the economy's failure to grow as quickly as originally forecast.
"The pace of consolidation under the programme has struck an appropriate balance and continues to do so for the period ahead, enabling Ireland to make steady progress," Mr Chopra said in the statement.
"Putting public finances on a sound footing and promoting a durable economic recovery are both imperative for Ireland's future."
Officials from the IMF and the other members of the troika are in Dublin this week to conclude meetings with officials from the Government and other organisations.
The troika is likely to issue a statement towards the end of the week on how the Government is doing under the terms of the bailout agreement.
The IMF said that it was restating its position in response to media queries regarding its research on the impact of fiscal adjustment on economic growth.
The fund issued a similar statement in relation to fellow bailout recipient Portugal last week, urging it to continue a tough budget adjustment that was imperative for the country to return to financing itself in debt markets.