The State's so-called bad bank, the National Asset Management Agency (Nama), may not restrict its purchases to impaired property development loans, Taoiseach Brian Cowen said today.
The International Monetary Fund said in a June 24th report on the Irish economy that Nama should consider buying other classes of loans.
“That’s an issue they have asked us to consider and it will get due consideration,” Mr Cowen said in an interview with RTÉ radio’s News at One today.
“I don’t wish to pre-empt or suggest one way or the other until we actually reflect on that.”
Mr Cowen rejected a suggestion from the IMF that Government decisions during his tenure as Minister for Finance from 2004 to 2008 had contributed to the structural problems with the public finances.
He said the decisions during that period were taken in the context of the best information and forecasts available at the time.
In its report the IMF says: “Since the start of the decade, and especially from 2005 to 2007, easy credit fostered a property bubble, bank exposures to property lending soared while reliance on wholesale funding intensified, and international competitiveness was compromised as wages climbed rapidly.”
“On all these dimensions, Ireland had become remarkably vulnerable. Yet, dazzling growth and buoyant public revenues prompted tax reductions and expansion of public expenditures that have proved unsustainable.”
The Taoiseach said he believed a public capital programme was needed to “displace some of the reduced residential building output which was going to correct itself, was correcting, itself but now we find a hard landing because of the seismic shock that has taken place”.
He said as recently as last year when he took office as Taoiseach forecasts from the ESRI and the OECD were suggesting growth rates of 3 per cent were possible this year.
Mr Cowen said at no stage over recent years were Opposition politicians calling for lower spending and higher taxes. On the contrary they were calling him “Scrooge”, he said.
Additional reporting Bloomberg