Cowen rules out debt default

TAOISEACH BRIAN Cowen said yesterday he does not accept the argument that it would be better for Ireland to default on its debt.

Responding to claims made by UCD academic Prof Morgan Kelly that the Government bank bailout will ultimately leave the State insolvent, Mr Cowen said the balance of evidence suggested a more optimistic scenario than that put forward by the professor.

Speaking on RTÉ's Morning Ireland, Mr Cowen again defended the Government's approach to dealing with the economic crisis.

Writing in last Saturday's Irish Times, Prof Kelly said the open-ended guarantee of banks' liabilities and the Nama bailout will leave the Republic with "a worse ratio of debt to national income than the one that is sinking Greece" by 2012.

However, this analysis was roundly rejected by the Taoiseach, who said there was evidence to suggest that Ireland was already in a better place than it had been.

“Really implicit in some of the argumentation is the idea that it would be better for Ireland to default. But we simply don’t accept that at all and I think all of the implications from other countries where that happens greatly undermines, not just in terms of financial credibility but also the ability to retain confidence at home,” he added.

The Taoiseach said there was objective evidence available which confirmed that the Government was taking the right approach to dealing with the economic crisis. However, he conceded the approach chosen was “a difficult one that imposes its own hardships and difficulties for people”.