Saturday 20 January 2018

Honohan slams €70bn forecast

Central Bank governor claims the final bailout cost predicted by UCD economist Professor Morgan Kelly is not 'factually correct'

Laura Noonan

Laura Noonan

CENTRAL Bank governor Professor Patrick Honohan yesterday slammed Professor Morgan Kelly's damning assessment of the Irish economy, saying the forecasts were not "a likely outcome at all".

The commentary came two days after UCD economist Prof Kelly published an article claiming the bank bailout will cost €70bn, and not the €50bn pencilled in.

The article generated massive attention worldwide and was blamed by some as the trigger for the latest surge in the interest rates demanded by holders of Irish Government debt.

"His articles enrage some people, they entertain me," Prof Honohan told a Joint Oireachtas Committee last night when asked about the predictions.

The Central Bank boss went on to say that while "some things he (Kelly) says are factually correct, some are not".

"All the facts in the article can be projected out to a much more favourable outcome," he added.

Forecasts

"I don't regard his forecasts as representing a likely outcome at all."

Earlier, Prof Honohan stressed that while the Central Bank was keeping a close eye on mortgage debt they had seen no evidence of a dramatic deterioration.

The former TCD lecture also used his committee appearance to also pour cold water on speculation of an intervention from the International Monetary Fund (IMF) turning Ireland on its head.

"Many times, countries get into difficulty because they haven't found a policy that's a sensible policy," Prof Honohan said. "In this case, I'd assume that the IMF would sign up to the policies that have been prepared by the Government ...

"The IMF package wouldn't look that much different."

Prof Honohan said he "strongly endorsed" the Government's plans to lower Ireland's borrowings to 3pc of gross domestic product by 2014.

Under sustained questioning from TDs and senators, he admitted that the policies being pursued would do damage to the economy but said Ireland had little choice.

The comments came as the interest rate on Irish debt remained stubbornly above the 8pc mark, or about 6pc above the cost of German borrowings.

Asked when it would be appropriate for Ireland to begin issuing new debt, Prof Honohan stressed that there was "no simple number" but said the current rate was "well above" the re-entry level.

Irish Independent

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