Monday 18 December 2017

Lenihan to 'sell' recovery at IMF meeting

Finance Minister Brian Lenihan. Photo: Tom Burke
Finance Minister Brian Lenihan. Photo: Tom Burke

Laura Noonan

THE Government is considering using an upcoming meeting of financial leaders from across the globe as an opportunity to convince world markets of Ireland's ability to weather the banking crisis.

Central bankers, finance ministers, private sector executives and academics will all be gathering in Washington from October 8 to 10 for the annual meetings of the World Bank and International Monetary Fund (IMF).

Finance Minister Brian Lenihan has missed the event for the past two years after being detained in Ireland to deal with the early Budget in October 2008 and the establishment of the National Asset Management Agency (NAMA) last year.

Sources last night said Mr Lenihan may attend this year's meeting since it would represent an "opportunity" to get key messages out to a wide range of financial heavyweights face-to-face, without travelling to all their countries.

The most crucial message will be the "manageability" of Anglo Irish Bank's bailout, after fears about the spiralling cost of the bank's rescue recently forced the Government to pay record interest rates on state borrowings.

Mr Lenihan has said he'll have a final figure on the cost of Anglo Irish Bank "by October", with some sources suggesting a cost could be available before the end of this week.

"Once there's a final figure for Anglo there'll be a major push [to communicate with international markets]," said one source.

"There'll be briefings for foreign journalists and analysts explaining how it's going to work, and you could try and do something around the World Bank meeting in October as well."

If Mr Lenihan doesn't attend the World Bank/IMF meeting, he may opt for a tour of financial capitals instead, as he battles to restore confidence in Ireland so that the State can borrow more cheaply.

The revelation of Mr Lenihan's PR offensive comes as the National Treasury Management Agency (NTMA) prepares to auction more than €1bn worth of bonds tomorrow.

The auction is being held despite the fact that Ireland's debt is being secured at record interest rates and the State already has enough money to run the country until next June.

Weakness

"There's a benefit in staying in front of the market and staying on investors' radars," one source said, explaining the rationale behind tomorrow's offer.

"The plan has been to do €1.5bn a month, it could be seen as a sign of weakness if you then didn't [raise that]."

Press reports over the weekend suggested the Government might ultimately have to sell the €14bn in assets it has built up in the National Pension Reserve Fund (NPRF) if raising money on the private market proved too costly.

The NPRF assets are set aside to fund pensions from 2025, so the State could in theory liquidate the assets and 'borrow' money from the fund for 15 years rather than borrowing money from the international markets.

"The newspaper report is merely based on speculation from analysts and there is no substance to it," a spokesman for the NPRF said over the weekend, adding that the markets "recognise" the "additional financial strength" that the pension fund gives Ireland.

Irish Independent

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