THE GOVERNMENT’S economic strategy to deal with Ireland’s financial and banking crisis “appears to be on the right track”, though difficult challenges remain, the acting head of the International Monetary Fund has said.
Speaking in London yesterday, John Lipsky, who offered broad support for the British government’s own actions to cut its national deficit, pointed to “some positive signs” in Ireland, including the growth in exports.
“Right now, the strategy appears to be on track. That is not to say that it is not a difficult challenge. Of course, it requires some forthright action by the Irish authorities to re-establish the basis for sustained growth.
“Right now, that programme appears on track. It contains some positive signs – like a return to export growth in the Irish economy. We all have an interest in the success of this effort,” said Mr Lipsky.
The American will lead the IMF until a replacement is found for the recently-resigned Frenchman, Dominique Strauss-Kahn, who entered a not guilty plea yesterday in New York to rape charges made by a hotel maid.
Mr Lipsky moved firmly to quash speculation that the IMF would support a restructuring of Greek debt, following waves of public anger against the latest IMF-backed measures to get its austerity efforts back in line with targets.
“We have announced last Friday that together with our European partners and the Greek authorities we have reached an understanding on a policy package that would together put the current programme on track,” he said.
Acknowledging that the financing of the latest Greek package has still to be confirmed, the acting IMF chief emphasised: “Let me be clear that the programme that we are supporting and that has been approved and which the latest programme is intended to put back on track does not contemplate debt restructuring.”
Meanwhile, British chancellor of the exchequer George Osborne was clearly delighted with the IMF’s decision to validate his efforts to cut public spending and reduce the national deficit, despite criticism from economists over the weekend.
In its annual report on the UK, the international body said: “The post-crisis repair of the UK economy is under way. However, the weakness in economic growth and rise in inflation over the last several months was unexpected.
“This raises the question whether it is time to adjust macro-economic policies. The answer is no as the deviations are largely temporary. Strong fiscal consolidation is under way and remains essential to achieve a more sustainable budgetary position.”
The IMF’s verdict, if supported by events, is a major boost for Ireland, since the UK is the most crucial market for Irish-owned exporters.
Many British companies, it said, have strong balance sheets and should be ready to invest. However, the IMF lowered its growth forecasts for the UK to 1.5 per cent this year, from the earlier target of 1.7 per cent, although it added that it believed it would “accelerate gradually” to about 2.5 per cent later.
Questioned about the low levels of growth in the world’s most advanced economies, Mr Lipsky said economic downturns that are accompanied by financial crises “tend to leave longer tails” than those that happen without chaos in the markets.
In a boost for the economy today, the computer giant Dell is expected to announce more than 100 additional jobs in the mid-west.
Taoiseach Enda Kenny is due to meet Dell executives for the announcement. Dell has about 2,300 staff in Ireland: 1,000 in Limerick in service and support and 1,300 in Cherrywood, Co Dublin involved in direct sales and telephone-support operations.