The Government has been making its determination to stabilise the public finances clear to international companies and ratings agencies, the Taoiseach Brian Cowen told reporters in Davos this afternoon.
He was speaking on a day when Irish government debt became the riskiest in Europe as its credit-default swap price rose 2 basis points to 262.5, according to CMA Datavision prices.
Moody's Investors Service also downgraded its outlook on Ireland's AAA debt ratings to “negative” from “stable” today, basing the change on a view that “the current economic crisis is likely to significantly affect Ireland's economic strength and government financial strength for the years to come”.
Asked whether the view of credit ratings agencies’ on the Irish economy had been raised with him by companies or politicians he had met in at the World Economic Forum at the Swiss Alpine resort of Davos, Mr Cowen replied the Government was determined to address the budget deficit.
The first step would be the stabilization of the public finances to alleviate the deficit that had arisen due to reduced tax revenues, he said.
The Government was finalising a stabilization plan that would show how it planned to deal with the deficit between now and 2013 and that this would be submitted to the European Commission, he said.
This plan will outline how the Government plans to bring its budget deficit below the 3 per cent limits set by the stability and growth pact.
He said the opportunity to market Ireland to an international audience was one of the main reasons for attending the Davos summit.
“I think it is important to show that Ireland is out there marketing itself, networking and meeting with investors . . . We are an open economy. We live by our trade and our exports.”
The Taoiseach said a number of companies at the summit had expressed an interest today in investing in Ireland but he declined to be more specific.
Mr Cowen said he had spoken to senior executives from a number of international companies and believed they “would still see Ireland as part of their plans going forward”.
Mr Cowen said he was reminding people the international investment community that “a large component of our deficit is our capital investment programme, which is twice the EU average. It is about 5 per cent of GNP.”
With talks on the Government’s proposals to secure €2 billion in spending cuts continuing with the social partners in Dublin today, Mr Cowen said he had also stressed benefits of social partnership to business leaders.
“It has brought an ability for Ireland to show that we are a zone for stability, that investors can predict overall macro-economic policy directions.”
“There are people [here] who have invested in Ireland who still have plans to invest further. There are one particular industry which is looking to the next generation of its products and services and sees Ireland as a very central part of its plans because the Irish plant is one of the most efficient it has worldwide,” Mr Cowen said.
The Taoiseach said there were differing views as the depth and duration of the recession.
“There is no doubt that 2009 is going to be a very difficult year and next year for some will see a return of some growth. For us we will have to face into 2010 with the same determination that we face into this year.”