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Irish Government blew opportunity to get debt deal – former IMF chief Mody


Ashoka Mody of the IMF outside the Department of Finance. Picture credit: Damien Eagers

Ashoka Mody of the IMF outside the Department of Finance. Picture credit: Damien Eagers

Ashoka Mody of the IMF outside the Department of Finance. Picture credit: Damien Eagers

THE current government blew an opportunity to get a debt write-down deal and a “slower pace of austerity” from the EU/ECB/IMF troika when it took office four years ago, the former IMF chief of mission to Ireland said today.

When this (Irish) government came in it had a mandate,” he said in an interview on Newstalks’s Lunchtime programme.

"The new government had so much going for it.

"Ireland fell in with that premise and therefore perpetuated a culture that this current Greek government is trying to break.

"It was on that premise that it won the election and what the deal at that time could have been, I don't know but it should certainly have been a superior deal. That deal would have required a clear premise on some amount of debt restructuring," he added.

Ashoka Mody, an economist and a visiting professor at Princeton University, also suggested that the debt accumulated by the previous government was “odious debt” that arguably should not have to be repaid.

In international law such debts are considered to be the personal debts of the regime that incurred them and not those of the State.

While the Government has claimed it has already received a number of concessions from Europe including the promissory note deal on the former Anglo Irish Bank, many believe it should have held out for a debt write-down.

"There was a burden of debt that would legitimately be declared as an odious debt and this was not necessarily because there was something unique about this particular government but because there had been severe and egregious errors that it inherited," Mr Mody said.

He also said that water charges were symbolic. The financial "burden was borne unequally."

Greece is still fighting for some kind of deal this week as euro zone finance ministers meet in Brussels.

They are attempting to find common ground with Greece's' new government, elected on a pledge of less austerity.

Speaking recently, Finance Minister Michael Noonan said our debt is sustainable – "evidenced by the fact that borrowing costs are the lowest on record."

Our debt-to-GDP ratio peaked in 2013 at 123pc and fell to an estimated 110pc last year, he said.

The latest figures show the Greek ratio at about 170pc.

Mr Mody also said he was confident that Greece will eventually restructure its debts but he warned against a “bogus restructuring” whereby the country’s problems would not be sorted out properly.

“It’s not in anyone’s interest to draw this out,” he said. “The longer it lasts the longer the political discontent, it’s not just in Greece.“

“The fact that the Greek government is much maligned in Europe is not a surprise.”

Online Editors