Spiralling price of Ireland's debt leaves Somers 'aghast'
Published 18/09/2010 | 05:00
The former boss of the body that manages government debt has said he is "aghast" at the surge in the cost of our borrowing on international markets.
Michael Somers, who retired as chief executive of the National Treasury Management Agency (NTMA) last year, believes when the final cost of the winding down of the now nationalised Anglo Irish Bank becomes clear next month, the markets should be calmer.
The interest rate -- or yield -- demanded by investors to lend money to Ireland hit a high of 6.33pc yesterday as international lenders voiced concerns about the cost of the banking crisis and the country's public finances with our €20bn budget deficit. Mr Somers was speaking on the day details of his €1m pay packet for 2008 emerged.
Addressing members of Association of European Journalists at the St Stephen's Green club in Dublin, he defended his €576,000 salary and bonus of €403,000 for 2008 and said "people can make up their own minds" if he was worth it.
On concerns about the high cost of government borrowing he said: "I certainly think it should come down. There's always a price to be paid for uncertainty and we're paying a fairly heavy price for it at the moment. Say the cost of Anglo and Irish Nationwide is €40bn to €50bn, the National Pension Reserve Fund would cover about half of that."
Although Mr Somers said he was not recommending that the fund be raided to fix the banks, he said ordinary "depositers" in Anglo had to be protected.
"We're going through an uncomfortable time and we'll get out of it, the question is at what cost?"
But he added that we needed to get out there and spread the message that things were not as bad as some abroad believed.
He said the reasons for downward spiral in the economy were well documented, including the Irish passion for buying property and the banks' lending sprees.
But we need to move forward despite "awful" aspects of the economy, including unemployment. "I think one quick-fix for the economy is promoting tourism. And we can up our game there."