Ireland should seek debt write-down when Greek crisis ends, says ex-IMF official

The savage eye of Michael Noonan

Brian Hutton

IRELAND should seek a "significant" debt write-down after the Greek crisis is resolved, a former IMF chief economist has said.

Kenneth Rogoff said, although the Irish economy was recovering, the country would be "far better off" today if the Government had not taken over so much banking debt.

His remarks come as former Taoiseach Brian Cowen (inset) prepares to make his second appearance at the Banking Inquiry.

Mr Cowen is expected to say Ireland was bounced into the EU/ECB/IMF bailout.

Former International Monetary Fund economist Mr Rogoff last night said Ireland should be among a number of countries to "receive a significant debt write-down".

"Of course, right now the Irish economy is recovering and it might not be the best time to confuse markets, especially with Greece on the brink," he told the Press Association news agency.

"But, eventually, the issue should be brought back to the table."


Mr Rogoff believes massive debt saddled on vulnerable economies in Europe is a major impediment to their growth.

"Ireland would have been far better off today if the Government had not taken over so much of the bank debt, and instead allowed bank creditors to absorb a significant loss," he said.

"As I understand it, considerable pressure was brought to bear on Ireland to protect the rest of the eurozone against contagion. Perhaps, but then the costs of the bailout should have been shared as well.

"The legacy of this situation should be rectified at some point, even if now might not be the best time."

Mr Rogoff, a Harvard University professor, was chief economist and director of research at the IMF from 2001 to 2003.

The Sunday Independent yesterday reported details of what former Taoiseach Mr Cowen is expected to tell the Banking Inquiry on Wednesday.

Sources said he will leave the inquiry in no doubt as to his resentment at the manner in which pressure was put on his government in relation to the bailout.

He is expected to criticise the role of former ECB president Jean-Claude Trichet .

Mr Cowen is also set to outline how his government underestimated the impact of IMF officials coming to town and how he and the late finance minister Brian Lenihan realised it sent a message that it was all a done deal.