Monday 17 December 2018

Sun shining on Irish economy but clouds on horizon - IMF

Christine Lagarde, managing director of the International Monetary Fund, paid tribute to former Finance Minister Brian Lenihan as ‘a solid soldier in the fight against the crisis’. Photo: Conor McCabe
Christine Lagarde, managing director of the International Monetary Fund, paid tribute to former Finance Minister Brian Lenihan as ‘a solid soldier in the fight against the crisis’. Photo: Conor McCabe

Kevin Doyle and Laura Larkin

The sun is shining on a "remarkable" recovery for Ireland - but there are clouds on the horizon, the managing director of the International Monetary Fund (IMF), Christine Lagarde, warned.

On a two-day visit to Dublin, the IMF warned that people shouldn't become complacent amid extremely positive economic indicators.

But she added that she felt "reassured" Ireland had learned from the past and "will take all the right measures" during this boom period.

Ms Lagarde met with Taoiseach Leo Varadkar and Finance Minister Paschal Donohoe to discuss budgetary plans.

Speaking outside Government Buildings afterwards, she said: "Clearly the sun is shining on the Irish economy."

This is Ms Lagarde's third visit to Ireland since taking up her role as IMF chief in 2011.

"Growth was only 1.6pc as opposed to 7.8pc in 2017. Unemployment was 14.6pc back in 2013, when it is less than 6pc now which is nothing less than a remarkable development after what the country has gone through," she said. "The numbers speak for themselves."

However, the former French finance minister revealed that she also discussed "some of the challenges and some of the clouds which we see on the horizon" with the Taoiseach.

"Ireland has to make sure it has the resources, the rainy day funds, the good fiscal position to resist potential shocks whether they come from trade, whether they come from financing costs, whether they come from tax," Ms Lagarde said.

Mr Varadkar said the country was "enjoying a period of strong growth and increased employment, but we must proceed carefully to share the benefits with everyone".

In a clear message to Opposition parties ahead of Budget 2019, he said the Government must guard against "the type of policies that have resulted in the boom-bust of the past".

"We are investing in the future - including in infrastructure - and we are ensuring Ireland will be well prepared should any of the external risks we face materialise.

"It is always valuable to hear the views of external experts, and we will always listen carefully to what the IMF has to say," Mr Varadkar said.

His meeting with Ms Lagarde also touched on the issue of gender balance and diversity on the board of financial institutions.

The Taoiseach suggested more women would "perhaps lead to better decision-making and fewer unnecessary risks".

"In employment terms, the participation rate for Irish women has recovered in recent years, but still lags behind many of our partners and peers. This needs to change."

He noted the Government will shortly approve legislation relating to gender pay, which will promote transparency on wage levels.

Justice Minister Charlie Flanagan is expected to bring the General Scheme of the Gender Pay Gap Bill to Cabinet today.

Earlier at the Central Bank, Ms Lagarde described former finance minister, the late Brian Lenihan, as a "solid soldier in the fight against the crisis".

Ms Lagarde said many of the reforms introduced since the crash for the eurozone as a whole had been motivated by the need to change a system that in the last crisis in Ireland saw the costs of banking failures "largely borne by taxpayers".

And she described how in 2008 she initially heard about the Irish bank guarantee directly from Mr Lenihan, as he called his peers elsewhere in Europe.

"I myself will never forget the phone call I got one morning from Brian. 'We just have to guarantee all the banks, there is no way around it'," she quoted him as saying.

Irish Independent

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