The assessment by the International Monetary Fund (IMF) that Ireland will pay a higher price to stabilise its banking sector than any other industrialised country is a “damning” indictment on Fianna Fáil’s record in office, Labour’s finance spokeswoman Joan Burton has claimed.
An IMF report, published yesterday, indicated the cost of stabilising Irish banks will be the equivalent of about €24 billion or 13.9 per cent of the State’s annual gross domestic product (GDP), the highest government bailout as a proportion of economic output.
Ms Burton said the report confirmed that Irish taxpayers will have to pay a high price for Fianna Fáil failure to properly regulate the banks and “their reckless stoking of the property market”.
“I hope that the IMF report will act as a wake-up call to the Government in respect of the likely scale of the cost of the proposed bailout not just to current taxpayers, but also to future generations,” she said.
The cost of bailing out the banks in the UK and the US fell slightly behind that of Ireland as a share of the value of their economies, totalling 13.4 per cent and 12.1 per cent of GDP respectively, in a list of 19 developed economies.
Ms Burton claimed the Government’s approach to the bank’s reflected “a serious uncertainty” on how to proceed, especially in respect of the proposed National Assets Management Agency (Nama).
“The suggestion before Easter was that the legislation would be enacted in the Dail session that starts today. Now there are suggestions that it could be October before the legislation is introduced,” she said.
The IMF said Ireland was one of a number of countries with large banking sectors relative to the size of its economies or with concentrated exposures to the property sector that could face substantial bank bailout costs as a result.
The Washington-based organisation said governments should consider temporarily nationalising financial institutions, a move the US government and some others have until now shied away from.
“A government should aim to ensure that banks can return to private ownership as expeditiously as possible. Banks that are not viable should be resolved promptly,” the fund says.
Yesterday, the National Treasury Management Agency (NTMA), the Government’s debt management body, has raised a further €1 billion in the sale of two bonds, bringing total borrowing this year on long-term debt to €12.3 billion, just shy of half the record €25 billion State borrowing required this year.