THE TAOISEACH has defended his claim that the National Asset Management Agency (Nama) will increase the supply of credit into the economy despite the International Monetary Fund (IMF) saying it would not lead to any significant increase.
“People should contemplate what level of credit accessibility we’d have in this economy without Nama,” he said.
“It’s not just sufficient in itself obviously for credit flow, it’s certainly an important and necessary part of restructuring our banking system, of that there’s no doubt, in terms of improving as a location for funding of banking operations,” said Mr Cowen.
Mr Cowen has previously said that the Government’s objective in restructuring the banks through Nama was to “generate more access to credit for Irish business at this critical time”. Last September, the Minister for Finance expressed a similar view, saying it would lead to more lending for business and households.
Yesterday The Irish Times reported that the IMF told Minister for Finance Brian Lenihan last April that Nama would not lead to a significant increase in lending by the banks.
Responding to questions about the story at Engineers Ireland headquarters in Dublin, where he was launching Engineers Week 2010, Mr Cowen said Nama would make Ireland a better location for the funding of banking operations.
“This morning there was some people talking about what happened 10 months ago at a meeting,” he said.
Nama is “absolutely vital and necessary” to improving Ireland’s banking system, he said.
In his address launching Engineers Week, Mr Cowen expressed concern at Irish children’s performance in mathematics and science, saying he did not want to see Ireland relying on “imported talent” for engineers in future.
Mr Cowen said he was committed to finding ways to improve mathematical attainment.
“One area of particular concern to me is the performance of Irish children in maths and science. While Ireland’s performance in mathematics is average in an OECD context, I do not believe that is enough,” he said.
“Enhancing the mathematical ability of our population is a challenge faced by most developed countries. I do not want Ireland to have to rely on imported talent to become our engineers of the future.”
Mr Cowen said an encouraging development was that the number of people accepting third-level places on engineering courses in this academic year was up over 20 per cent on the previous intake.
Meanwhile, according to an internal Department of Finance memo, the IMF noted last April that bad loans would not just occur in commercial property and development but across mortgages, loans to small and medium-sized businesses and credit cards.
The IMF accepted the view that house repossessions were “not as common in Ireland as in other countries” but still expressed concern that there would be a rise in “past due” or problem loans.
It agreed with AIB’s observation that “banks all over Europe were rowing back on lending”.
