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Thursday 8 December 2016

Europe's failure is damaging confidence in Ireland -- IMF

Emmet Oliver and Fionnan Sheahan

Published 15/07/2011 | 05:00

THE sharp divisions between Ireland's bailout partners were brought into the open yesterday when the IMF's Ajai Chopra criticised Europe's response to the crisis.

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Flanked by his European counterparts at a press conference in the European Commission's Dublin headquarters, Mr Chopra said the EU was creating a "contagion'' effect which was unhelpful for Ireland.

"The problems that Ireland faces are not just an Irish problem," said Mr Chopra. "They're a shared European problem.

"What we need and what's lacking so far is a European solution to a European problem.

"What's critical now is for Europe to dispel the uncertainty that's being created by the lack of what's perceived by markets as an insufficient response."

The deputy head of IMF's Europe division said Ireland had a "good chance'' of getting back into the markets to borrow fresh funds by 2013.

Our borrowing costs started to come down in March after the bank stress tests. However, due to problems in Europe -- and particularly in Greece -- they started to rise again.

The IMF/EU/ECB team in Dublin declared the €85bn bailout programme to be "on track and well financed''.

The bailout team said the deficit in the first six months of the year was on target and would end the year at below 10.5pc of GDP, which is what the lenders require of Ireland.

Ireland has also met another target by appointing a new spending and tax watchdog, known as the Fiscal Advisory Council.

Ireland will need to borrow money again in mid- or late- 2013, Michael Noonan said at a separate event yesterday.

The Finance Minister said the State was determined to test debt markets in 2012 and that it probably had enough funding until the bailout runs out at the end of 2013.

However, he admitted that the country would face a big hurdle in January 2014, when it needs to repay nearly €12bn in debt.

Ireland needs to hit a budget deficit next year of 8.6pc, the minister added, but it was too early to say how much would need to be cut in the December Budget until later in the year.

Irish Independent

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