Irish

Wednesday 30 July 2014

Market has not rewarded our efforts, says Honohan

Colm Kelpie

Published 09/01/2013|05:00

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CENTRAL Bank Governor Patrick Honohan has said the bond markets had not done enough to acknowledge Ireland's budgetary efforts.

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At a conference in Switzerland, Mr Honohan, pictured, said there had been "poor reward" for what had been a "sizeable fiscal adjustment effort".

"Irish sovereign spreads may no longer be bloated by redenomination risk, but at 300 basis points at the long end, they do seem to reflect a credit risk premium that is poor reward, so far, for what has been a sizable fiscal adjustment effort," he said.

The Central Bank chief was speaking in Basel at the Bank for International Settlements Conference, 'Sovereign Risk: A World without Risk-free Assets'.

He told delegates that the "unfortunate decision" to lock in a comprehensive bank guarantee before the potential scale of the banking losses could be appreciated contributed to the fact that Ireland's actual and prospective government debt shot up from 25pc of GDP in 2007 to 117pc five years later.

Irish Independent

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