Lagarde says 'good news on the horizon' for Ireland and praises fiscal policy

Christine Lagarde, managing director of the IMF, with Minister for Social Protection Joan Burton, Minister for Children and Youth Affairs Frances Fitzgerald and Minister for European Affairs Lucinda Creighton at a lunch after Ms Lagarde addressed an event organised by the Institute of International and European Affairs in Dublin Castle. Photograph: Alan Betson

Christine Lagarde, managing director of the IMF, with Minister for Social Protection Joan Burton, Minister for Children and Youth Affairs Frances Fitzgerald and Minister for European Affairs Lucinda Creighton at a lunch after Ms Lagarde addressed an event organised by the Institute of International and European Affairs in Dublin Castle. Photograph: Alan Betson

Sat, Mar 9, 2013, 00:00

Ireland has completed two-thirds of the fiscal policy work required but more needs to be done in the banking sector, IMF managing director Christine Lagarde during her visit to Dublin yesterday.

She said the implementation of the Irish bailout programme was “setting standards” in terms of success and results and there was “good news on the horizon” for Ireland.

She congratulated the Government and, “more importantly”, the people of Ireland at a press conference in Government Buildings with Tánaiste and Minister for Foreign Affairs Eamon Gilmore and Minister for Finance Michael Noonan, after she met Taoiseach Enda Kenny.

“What has been done is huge by any standard. The amount by which the deficit has been reduced, the determination shown in actually implementing a programme has been extraordinary,” she said.

“It doesn’t mean to say that all has been done but I would say that more than two-thirds of the work has been done in terms of fiscal policies and there is still more work to do on the banking sector to make sure it is safe, solid.”

Positive growth numbers

Ms Lagarde said it was remarkable that Ireland was one of the few countries in the euro zone showing positive growth numbers. “While it has been very hard there is clearly good news on the horizon,” she said.

Ajai Chopra, deputy director of the IMF’s European Department, was also present. Ms Lagarde said the IMF had been on the side of Ireland “through the toughest times” and would “stay available and on call”.

She said the imperative was to see Ireland exit its bailout programme successfully.

“We have an open mind about many issues; many of the terms and conditions, if you will, about the exit strategy.”

Speaking at an event organised by the Institute of International and European Affairs, Ms Lagarde said that, in dealing with the mortgage crisis, bankruptcy and home repossessions should be “left on the table” but used only as a last resort. Household and company debt solutions are needed for those who can’t pay but “not for those who don’t want to pay”, she added.

Support for property tax

The IMF managing director also said that her organisation supported the introduction of the forthcoming property tax, not least because it was a progressive form of taxation.

She reiterated her organisation’s call for the EU’s bailout fund, the European Stability Mechanism, to retrospectively recapitalise Irish banks. To do so would be “one of the good uses” of the mechanism, she added, as it “would help insulate the Government from further potential drain if the economic situation gets worse”.

Ms Lagarde also offered a rebuke of the European Central Bank, saying it should cut interest rates further and make its new government bond-buying programme available to countries exiting bailouts.