Friday 23 February 2018

Full recovery here will take at least a decade, says IMF

Central Bank Governor Patrick Honohan
Central Bank Governor Patrick Honohan
Colm Kelpie

Colm Kelpie

RECOVERY in Ireland will take at least a decade, the International Monetary Fund (IMF) has said.

The stark warning comes just days after hundreds of investors snapped up Irish bonds amid huge international interest as the Government successfully passed its first test since leaving the bailout.

But the IMF's Ireland mission chief Craig Beaumont told a conference in Dublin that while he did not want to be a "wet blanket", reform was still needed.

"Things are looking bright after Ireland's successful programme, but the whole process will take at least the next decade for a full recovery to be achieved," he said.

His warning came as Central Bank Governor Patrick Honohan told the same conference that the financial crisis here had seen a substantial increase in the proportion of poor households suffering deprivation.

Mr Beaumont reiterated the IMF's concern about the health sector and said more work was needed to get further savings, while public sector reform and a comprehensive expenditure review must be carried out this year to pinpoint more savings. He said the next priority for the banks should be to focus on bad commercial property loans.

Prof Honohan (right) said the specific measures urged by the troika upon the State were sensible or inevitable, with "few really bad ideas''.

The Government had "considerable leeway" in choosing specific measures to meet the targets under the programme.

The crisis had had a broadly similar effect on incomes across the distribution, with an equal proportionate reduction in incomes hitting lower-income groups harder.

The day-long 'Future Directions for the Irish Economy' conference, organised by the European Commission, featured a number of high-profile speakers, including Prof Honohan; Central Bank chief economist Lars Frisell; Fiscal Advisory Council head John McHale; and IMF Ireland mission chief Mr Beaumont.

"The crisis will have a lasting unfavourable legacy," Prof Honohan said. "The accumulation of debt, public and private, will continue to weigh on growth prospects in a variety of ways. And many households are being affected by long-term unemployment.''

He said elements of reform in the banking sector had taken much longer than expected. "Even with troika pressure, the complex bankruptcy law reforms have come slowly. The mortgage arrears and wider impaired-assets problems are only now showing clear signs of coming under control," he added.

Irish Independent

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