Wednesday 18 September 2019

Makhlouf faces questions over economy - and his appointment

Pressure: New Central Bank governor Gabriel Makhlouf. Photo: Bloomberg
Pressure: New Central Bank governor Gabriel Makhlouf. Photo: Bloomberg
Donal O'Donovan

Donal O'Donovan

Gabriel Makhlouf, the new governor of the Central Bank, is due to take up his post today following his hugely controversial exit from a senior role in New Zealand.

He will immediately face significant decisions, including joining other eurozone central bank heads and ECB officials on September 12 to decide on a possible interest rate cut.

There is also pressure to relax mortgage lending rules which are due for annual review this autumn.

Piled on that is the uncertainty for the economy and financial system because of Brexit.

Mr Makhlouf arrives on the back foot following the fallout from his handling of a New Zealand budget leak in May.

He had called in the police and claimed a leak of the budget being prepared by the Treasury Department he was leading was a result of a deliberate hack, when in fact the department had failed to protect the information.

The incident, weeks after Finance Minister Paschal Donohoe's appointment of the outsider to the top regulatory job in Ireland, caused a political storm in New Zealand that reverberated here.

It was investigated by New Zealand's independent State Services Commission which found Mr Makhlouf had failed to take responsibility for the leak of sensitive budget information and fell short of expectations in how it was handled. But the commission also found he had acted in good faith and in a politically neutral manner.

In a letter to Mr Donohoe ahead of his arrival, Mr Makhlouf said he could have addressed the budget leak scandal "more clearly and with a different emphasis".

In June, Mr Donohoe rejected suggestions the appointment of Mr Makhlouf, a British citizen and the first foreigner to head the Central Bank, should be stalled.

The minister staked his personal reputation on the appointment being a success.

However, Labour Party leader Brendan Howlin has repeatedly called for a further examination of the appointment, which is likely to flare up again as soon the new Governor appears before an Oireachtas committee.

Irish Independent

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