IMF says pace of Irish austerity remains appropriate


The IMF, one of a trio of lenders overseeing Ireland’s 85 billion euro bailout, said it was restating its position in response to media queries regarding its research on the impact of fiscal adjustment on economic growth.
The IMF issued a similar statement in relation to fellow bailout recipient Portugal last week, urging it to continue a tough budget adjustment that was imperative for the country to return to finance itself in debt markets.
“The pace of consolidation under the program has struck an appropriate balance and continues to do so for the period ahead, enabling Ireland to make steady progress,” Ajai Chopra, the IMF’s deputy director for Europe said in a statement.
“Although there is uncertainty around any estimate of fiscal multipliers, there is no compelling evidence that a higher multiplier was at work in Ireland than the one assumed under the program.
“With overburdened bank, household and SME balance sheets, and weak growth in trading partners, a number of factors besides fiscal consolidation have been a drag on growth in Ireland.” The IMF, European Commission and European Central Bank, Ireland’s so-called troika of lenders, will give their latest quarterly bailout assessment next week with few issues foreseen in a period when Ireland resumed borrowing on long-term bond markets and continued to meet its program targets.