IMF talks moving 'quite rapidly'

 

The IMF's first deputy managing director today said talks between Ireland and the International Monetary Fund (IMF) are moving forward quickly but it is up to the Government to make the necessary political decisions.

"Obviously, our work there is technical, not political. But ultimately decisions have to be made by governments, not by technicians," John Lipsky told reporters in New York.

"The negotiations are proceeding quite well, quite rapidly. They're very intense. Obviously there is a great focus on progressing this as rapidly as possible."

The capital requirements for Ireland's bailout from the EU and IMF will be announced in the coming days as the State’s corporate tax remains a focus for discussion.

Earlier today, Austrian finance minister Josef Proell said he expects a discussion on an "economically viable increase" of Ireland's 12.5 per cent corporate-tax rate in return for European Union aid.

"Ireland has attracted a lot of companies with extremely low tax rates. I see room to manoeuvre on this," he said.

Ireland's corporate tax rate has been defended by the Government, and Minister for Finance Brian Lenihan who has said in recent days there is no pressure from other countries to increase it.

Fine Gael MEPs who met economic and monetary affairs commissioner Olli Rehn today said Mr Rehn told them Ireland’s corporation tax rate was not under review.

However, one of Chancellor Angela Merkel’s economic advisers, economist Peter Bofinger, has said Ireland has no alternative but to increase its corporate tax rate, following its application for a bailout.

The low tax rate is considered crucial to the economy’s ability to attract inward investment.

Ms Merkel today said the euro is in an "exceptionally serious" situation as Ireland seeks to become the second European country to need a rescue after Greece.

While Ireland gives "cause for great concern," the problem is different from Greece because Irish banks are the main issue, Ms Merkel said. "But it's also right and good" that the European Union set up the €750 billion rescue package with the IMF that Ireland is now preparing to tap.

At a Bloomberg conference in London today, financier Evelyn de Rothschild said Ireland's low corporate tax rate means it's "still attractive" for businesses.

"Ireland will come through this and there are opportunities," he said, adding that Ireland's recovery may take another two to three years.

Danish prime minister Lars Loekke Rasmussen said his government intended to give a bilateral loan to Ireland, joining Sweden and the UK in contributing to a bailout of the second euro member to request emergency support.

Mr Rasmussen said his Liberal-Conservative coalition had discussed an Irish loan with the other parties in the Copenhagen-based parliament. He said there was broad backing for a Danish contribution to the final package.

Denmark's largest lender, Danske Bank A/S, acquired National Irish Bank in 2005.

Agencies