Ireland’s borrowing costs on international financial markets should be reduced because of the difficult measures taken in the Budget, Taoiseach Brian Cowen said this evening following his arrival in Brussels for the European Union summit.
Asked if he was confident that interest rates on Irish debt would fall, Mr Cowen said: “Yes, I am. Because the country has a borrowing requirement next year of €18.8 billion, the fact is that that is an important consideration.
“It can’t determine totally our policy, but it is an important consideration for the country getting access to funds as we make this adjustment over the next few years. I think that the reaction, if you like, of the markets to the budget is a further indication of this need to instil confidence in the direction the country is going,” he said.
He said he believed the Budget has “been well received internationally”. It illustrated the determination of the Government and the Irish people to manage “our own affairs and to do whatever is necessary to show that we would stabilise the deficit", he said.
“Having stabilised it and having sought to protect to the greatest extent we can the more vulnerable people in society we now to proceed to work for recovery. I think it has been well received in that respect, and well received at home, too.
“Of course, you can find many aspects of the Budget where they adversely affect people, but I think people also recognise what needs to be done and that we need to get on with it. That is the mood generally,” he said.
Questioned about the widening of the spread on Irish Government bonds that has taken place – fuelled by international markets’ concerns about Greece, Mr Cowen said the Government would be in the Dáil over the coming week to clearly show Ireland's fiscal strategy and budgetary approach.
International markets will “acquaint themselves with those realities” in due course, he predicted. “I think they will reflect that in due course. There is always a little time for people to accommodate and understand what it is the government is achieving at the moment.”
Asked about prospects for next year’s Budget, he said: “The Minister for Finance has said that he expects it to be less difficult. This is a multi-annual strategy that we are adopting to get back to 3 per cent by 2014. The first job is to stabilise the deficit. That brings its own confidence internally and externally. Then next year, the adjustment will be more in the order of €3 billion, rather than €4 billion.”
Questioned about Opposition criticism of the Budget’s cuts to ministerial pay, which include some reductions already made, Mr Cowen said: “I am not going to play politics with this at all.
“The fact of the matter is that we took and made a move pending the Review Body’s recommendations. The Review Body made recommendations and we are implementing them. As Brian Lenihan said yesterday, this is a permanent reduction.”