Three key tasks that face any new government
For any new regime to succeed, economic policy must be first on the agenda for change, writes Colm McCarthy
Published 23/01/2011 | 05:00
A seven-week election campaign has commenced and seems certain to produce a change of government. Aside from the evident need to reform the political and public administration structures, there are just three main issues for economic policy.
Stop the borrowing as soon as possible
It is not in Ireland's interest to continue borrowing heavily over the next few years. Borrowing costs are just too high. We have already discovered that we cannot borrow from the markets on reasonable terms, and must borrow from the IMF and the EU on theirs. The rate of interest being charged is almost 6 per cent, the inflation rate roughly zero. This is a crushing real interest burden, and it is no consolation to be informed that the EU and IMF funds are cheaper than rates on Irish government debt in the secondary bond market. Some people who should know better are already talking about the four-year austerity plan as if it has been imposed on us against our better judgment by the IMF. Any sane country in our circumstances would choose to close the budget gap as quickly as possible, without having to be instructed to do so by our good friends in the Fund. There is no conflict that I can see between the best interests of this country and the advice on deficit reduction emerging from the IMF.