Belfast Telegraph

Saturday 12 July 2014

Bank governor challenges pessimists

Patrick Honohan tried to counter fears the IMF bailout of the Irish economy would not be enough to 'stop the rot'

The Governor of the Central Bank of Ireland has made a statement hitting back at those who think the euro is a doomed currency.

Patrick Honohan tried to counter fears the IMF bailout of the Irish economy would not be enough to "stop the rot" which had earlier seen Greece need the support of a 110 billion euro deal.

"The support of the European Commission, European Central Bank and the IMF underpins a clear economic and financial policy path for Ireland," he said.

"The first steps on this path have already been taken. The backstop funding now available means that those policies - both fiscal and banking - can be fully implemented and that market confidence returns."

He added: "The international authorities have demonstrated their confidence that Ireland can bring its debt dynamics under control."

The 85 billion euro international financial guarantee to shore up Dublin's economic credibility was thrashed out in an intense six-hour meeting designed to complete the details before the money markets open for business.

The finance ministers have been here before, when last April in the same Brussels building they hammered out a 110 billion euro bailout deal for Greece, reinforcing it with a temporary 440 billion euro "facility" designed as reassurance to jittery markets that any future Greek-style bailouts could be fully funded.

Mats Persson of Open Europe, which campaigns for radical EU reform, commented: "It's clearly in everyone's interest for the jitters in the eurozone to calm. However, merely passing debt around countries, banks and the ECB, which is what the current bail-out arrangements effectively are doing, will not solve any of the fundamental problems of either Ireland or the eurozone as a whole."

The President of the European Parliament Jerzy Buzek said the fact that three non-eurozone nations - the UK, Sweden and Denmark - were adding bilateral loans to the central bail-out pot - was a mark of confidence: "This concerted solution is a proof that the EU can fend off crisis."

But that may not be enough for investors. With weak eurozone countries such as Portugal and Spain still struggling and far from clear of bailout danger, the upbeat messages triggered by the Irish agreement may vanish as quickly as they did seven months ago.

Latest News

Latest Sport

Latest Showbiz