Fiscal consolidation must continue, IMF says

The head of the International Monetary Fund’s mission to Ireland said today that the country could be held up as a good example of how to transition out of a bailout programme but cautioned that “the Government will need to continue (with) its fiscal consolidation in the next few years”.

Craig Beaumont, the IMF’s mission chief to Ireland, said its preference would be for a continued broadening of the tax base rather than higher income taxes, along with a further tightening of spending by the State. He said specific actions were for the Irish Government to decide.

Mr Beaumont said unemployment remains too high and further action is required in tackling mortgage arrears and various sector reforms. But he said the Irish economy was showing positive signs of growth.

Ireland is due to exit the IMF-EU bailout on December 15th. On whether the IMF supported a precautionary credit line for Ireland when the bailout ends, Mr Beaumont said it was “not uncommon” for such an arrangement to be put in place but added that Ireland was in quite a “strong position” in relation to its bond yields and cash buffers, which are close to €25 billion.

He said it was “up to the Irish authorities to decide” if a backstop arrangement was required, adding that the IMF would be happy to consider such a request either before the December 15th exit date, or early in the 2014.

Mr Beaumont confirmed that the IMF would continue with oversight of Ireland until its loans are fully repaid. IMF officials will visit here every six months and Ireland will have until December 2023 to repay the Washington DC-based body’s loans, he added.