International Monetary Fund gives Ireland the thumbs-up

Country does not need financial assistance despite its 10% deficit, IMF says

Ireland can solve its economic problems without outside financial assistance, the body which oversees global financial stability has predicted.



In a rare piece of good economic news, the International Monetary Fund (IMF) told the Sunday Tribune that, while Ireland was facing difficulties, it was capable of overcoming them without any bailouts. "We do not envisage IMF financing will be needed to deal with these problems," said the organisation's chief spokesman, David Hawley.



Last week's Anglo IrishBank/Irish Life & Permanent deposit scandal has led to further deterioration in Ireland's creditworthiness and public sector unions are preparing to test the government's resolve over plans to implement a public service pension levy.



The two events have raised concerns about the country's ability to reduce an almost 10% budget deficit and keep a lid on rampant unemployment.



But Hawley was positive about Ireland's ability to cope with its problems. "I would say that Ireland faces a difficult economic situation and will need to take steps to manage the financial sector and fiscal risks," he said. However, he added that the IMF was not envisaging any need for Ireland to borrow from his organisation.



The IMF, which has already bailed out Iceland, Ukraine, Belarus and Latvia, is struggling to meet the demands on its own resources from countries struggling from the fallout of the global credit crisis. Recently it agreed to extend assistance to Hungary.



The question of IMF aid for Ireland arose a month ago when Taoiseach Brian Cowen denied he had mentioned such an idea to the social partners during talks in government buildings.



"I have never said that," he told reporters in Tokyo during a trade mission. "We are a member of the euro area and we have the best-performing economy in the last 10 years in the European Union."



However, the international markets have been spooked by talk of an IMF bailout and Ireland's credit worthiness remains under severe pressure. Any failure to implement the public service pension levy would be highly damaging on the international bond markets for Ireland, where interest costs on Irish sovereign debt have been rising fast.

