Report an endorsement of current policy, says Lenihan

THE IMF report was described last night by Minister for Finance Brian Lenihan as an important endorsement of policies being pursued by the Government to deal with the banking crisis and the recession.

The Minister welcomed the report, which he said focused on the difficulties facing the Irish economy and the banking sector and the actions being taken to deal with them, as well as the priorities for further action.

“This report is both a balanced and realistic assessment of the challenges we face, and also endorses the actions that we are taking,” said Mr Lenihan.

He added that the IMF had highlighted the unprecedented nature of Ireland’s difficulties and the scale of the correction needed to address them, and identified the risks that remained to overall economic and fiscal recovery.

“In particular, I welcome and note the significance of the fact that the IMF has stated that on the two fronts that matter most – the healing of the financial sector and the correction of the budgetary situation – the Irish Government has moved in the right direction. The Government is continuing to take the right steps to resolve our financial difficulties and to stabilise and restore our economy,” said Mr Lenihan.

He added that the IMF had identified the need for Ireland to improve its competitive position.

“The Government is very aware of this issue and is committed to doing just that. The recent declines in our price levels and Government action in terms of public sector wage rates are significant steps in the ongoing measures to improve our overall competitiveness,” he said.

The Minister also said that on budgetary matters, the IMF had noted that both the approach and the elements of Ireland’s budgetary plan were appropriate.

“In terms of the future necessary fiscal adjustments, I agree with the IMF’s analysis that the focus must be more on expenditure than taxation,” he said.

The report on Ireland had made clear that bad domestic policy was the main cause of our current economic problems, Fine Gael finance spokesman Richard Bruton said last night.

Labour spokeswoman Joan Burton said the report was “a fairly damning verdict”, and that it was clear the IMF was dubious about the Government’s banking policy.

Speaking to reporters at Leinster House, Mr Bruton said: “The very first line of this report makes it clear that the pain that Irish people are now suffering has entirely got to do with bad domestic policy. This isn’t an international tsunami that has hit us, this is bad policy, and we have to stop pretending.”

Read the full text of the IMF report at http://www.irishtimes.com/indepth/