Lenihan 'sure' Ireland will not require IMF/EU bailout
Minister for Finance Brian Lenihan said today he is "absolutely" sure the country will not need to seek a bailout from the IMF and European Union.
In an interview recorded for Bloomberg Television, Mr Lenihan said Ireland "was not in a balance of payments deficit position" but admitted the country did have "real fiscal and banking problems to address".
"We had a big contraction last year. We contracted by 10 per cent in GNP terms in one year. We got it back to zero again this year. That's quite a turnaround," he said.
Mr Lenihan claimed Ireland was emerging from deficit on the back of stronger exports and stressed the country is fully funded through to the middle of 2011.
Looking ahead to the budget, Mr Lenihan said tax "will have to play some part" in narrowing the deficit. Nevertheless, he stressed the Government did not intend to raise corporation tax from its current level of 12.5 per cent.
"We have a lot of companies, in ICT, in pharmaceuticals, medical devices, banking services, making a tremendous contribution to the economy [and] we want to encourage that investment not discourage it," said Mr Lenihan.
The Minister admitted there was a "big challenge" on the budget front with Government receipts lagging well behind expenditure. But he said a correction of over 7 per cent had already been achieved and that the four-year budget plan to be unveiled shortly would outline strategies for economic recovery and growth.
"What we are going to do is demonstrate over a four-year period how we can make those [fiscal] adjustments, because obviously, adjustments on this scale cannot be done in one year," he said.
"We have a strong underlying economic base. We had a big property bubble earlier in this decade and that has had a big impact on the economy but we are working out the consequences of that," Mr Lenihan added.
In the interview, the Minister also said that nothing was being ruled out in terms of cutbacks in the budget.
"We've looked at our welfare bill, our pension bill. All these areas have to be looked at," he said.
The Minister confirmed at the weekend that the fiscal adjustment in the December budget would be “well above the existing figure of €3 billion”.
Additional reporting: Bloomberg