Tuesday 21 May 2019

Irish economy faces challenges but austerity plan on track - IMF

Finance Minister Michael Noonan
Finance Minister Michael Noonan

Independent.ie reporters

THE IRISH economy faces major challenges but the austerity measures introduced as part of the €67.5bn EU/ECB/IMF loans are working, according to the bailout partners.

One of the biggest issues is weakness in the domestic economy but the Government is expected to meet its budget deficit target of 10.5pc of Gross Domestic Product this year and 8.6pc in 2012.

Speaking at a press conference to mark the latest review by the troika, IMF deputy director Ajai Chopra said Ireland is doing the right thing but outside factors could affect our export led growth as the worldwide economy struggles.

“Export demand is linked to global demand,” he said.

“As we've seen the global outlook has worsened."

He also said that while the cost of Irish borrowing has dropped, "euro area developments have increased drains on both sovereigns and banks” which could also affect confidence in the country’s economy.

Earlier Finance Minister Michael Noonan said today that while the EU/ECB/IMF troika has taken an interest in December’s budget, representatives have "no difficulty" if the Government changes measures as long as the overall target is achieved.

He also confirmed that Ireland has met all the conditions set out by representatives in its third review of austerity measures.

“We welcome the fact that our programme is on track and the recent reductions in our interest rate have further improved our debt sustainability,” said Mr Noonan.

“The focus now is on delivering the required adjustment for Budget 2012.

“We will not shy away from the tough decisions that are required but we will make decisions in a fair and equitable way and details of this will be announced in line with the timetable set out.”

He reiterated that the target is a budget deficit of 8.6pc of gross domestic product (output) but if that could be reached with €3.6bn of cuts then that would be done.

However, he added that further money will be taken out of the economy through the budget if necessary on December 6.

Minister Noonan said tax returns for October and November would have to be examined because they were big months for tax.

Public Expenditure & Reform Minister Brendan Howlin said the Government had made it clear it wanted to use the proceeds of any sales of State assets to stimulate growth in the economy.

The Government's medium-term budgetary statement for the three years between 2012 and 2015 would be published at the end of the first week in November.

Ireland faces "major challenges" ahead and the country's domestic economy remains weak, but the implementation of the country's bailout program continues to be strong, troika officials said today.

The Government is expected to meet its budget deficit target for this year of 10.5pc, the latest quarterly review by the country's from the EU-IMF-ECB bailout partners said.

"Growth in the first half of 2011 was stronger than expected," the report said. "But the slowdown in key trading partners is likely to cool Ireland's export growth."

Speaking at a press conference in Dublin this afternoon, IMF deputy director Ajai Chopra said Ireland was doing the right thing, and there was a lot of positives, but warned against losing sight of the risks.

Mr Chopra also highlighted the problem of household debt as a potential risk, dampening domestic demand.

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