A SENIOR Minister has described UCD academic Prof Morgan Kelly as a “prophet of doom” for claiming the country will become insolvent unless the Government abandons its policies to bail out the banks.
Minister for Communications Eamon Ryan said yesterday he disagreed profoundly with the views expressed by Prof Kelly in an opinion piece in The Irish Timeson Saturday.
In the article the UCD professor said that if allowed to continue the bank guarantee, Nama, and protections given to senior bank bondholders would leave Ireland with “a worse ratio of debt to national income than the one that is sinking Greece”.
However responding yesterday, Mr Ryan said the governor of the Central Bank, Patrick Honohan, who is an international expert in banking crises, had said the Government had got it right. “Most international commentators, including the European Commission, are saying the same.”
Mr Ryan accepted that the big mistakes were made on the banking side especially, but contended that Ireland had benefited because the Government was willing to make the hard calls quickly.
Prof Kelly argued that Ireland’s debt position was far worst when one excluded profits generated by multinationals and looked only at gross national product (GNP). But Mr Ryan rejected this analysis and said Ireland was trading in six key areas: tourism; food; energy; financial services; creative services; and high-tech FDI companies and manufacturers.
He said Ireland was doing well in all of those areas, and also argued the foreign companies created hundreds of thousands of jobs for Irish people who paid taxes.
He said Ireland’s trading position was much stronger than that of a country like Greece.
“We are trading in the positive. There is more money coming in than going out.
“When the international community look at that and see that Ireland is trading its way out of this, it will ultimately bring the debt burden down.”
The Department of Finance has also disputed Prof Kelly’s analysis. In a statement issued over the weekend, it said it was based on serious inaccuracies.
According to the department, the academic’s analysis was extremely pessimistic.
The department also referred to a speech two weeks ago by Prof Honohan to the Small Firms’ Association where he said the cost of getting the banks out of trouble was manageable, and that most of them started the boom with a cushion of shareholders’ funds that would enable them to pay their debts from their own resources.
Last night, Fine Gael leader Enda Kenny also condemned the Government’s banking strategy, saying it had failed because affordable credit was not flowing to small and medium Irish businesses.
In renewed criticism of the Minister for Enterprise, Mr Kenny said Batt O’Keeffe’s solution was to beg the banks to be more generous to companies. “This hasn’t worked in the past, and it clearly won’t work now.”