Irish Economy was on a High Growth Trajectory for more than a Decade now. But the Property Burst in the Wake of the 2008 Financial Crisis sent Ireland into its Worst Sovereign Debt Crisis. Kenneth Thompson, The Irish Ambassador to India, In an Exclusive Interview, Shares the Larger Picture of the Ireland Economy
Ireland recently became the second European nation post Greece to ask for a bailout with the European Central Bank and the IMF estimated at around $100 billion. Just days before the official declaration of asking for bailout, the Irish Ambassador to India, Kenneth Thompson, shared with Anchal Gupta his insights into the root causes of the sovereign debt crisis and what the Irish government is doing to tackle it. Excerpts:
B&E: Ireland’s name has been in global media next only to Greece as a nation looking for a bailout from the EU in the wake of the sovereign debt crisis. What is your take on that and what has the Irish government done domestically to handle this crisis?
Kenneth Thompson (KT): What the Irish government has done is trying to correct the public finances. The root cause of the problem was that we had a major boom in the property sector and a disproportionate part of our economy revolved around construction. The banks went into an over-lending spree for construction projects which resulted in the current scenario. Two years ago, the government set up a system to bail out the banks. However, we believe that we are well funded till the middle of next year. Also, there are larger interests like in the international money markets who are interested in the bonds issued. The government is working to cut public expenditure and it will soon declare a four year plan that targets cutting our public account deficit below 3% of GDP which is what EU guidelines say. Since 2008, we have made savings of up to $14 billion. We are working upfront to reduce a major portion of that deficit next year while we have aimed to save $6 billion this year.
B&E: What is the kind of external help that you are looking forward to from EU as well as non-Eurozone economies?
KT: Well, we intend to solve it on our own. We have something called the Financial Pension Fund which is a kind of sovereign wealth fund which is in a healthy state. We are also in a position to ask for support from the European Central Bank but then, in that, the international money market works with very different laws so we are focussed on improving our public expenditure which is the best we can do.
Ireland recently became the second European nation post Greece to ask for a bailout with the European Central Bank and the IMF estimated at around $100 billion. Just days before the official declaration of asking for bailout, the Irish Ambassador to India, Kenneth Thompson, shared with Anchal Gupta his insights into the root causes of the sovereign debt crisis and what the Irish government is doing to tackle it. Excerpts:
B&E: Ireland’s name has been in global media next only to Greece as a nation looking for a bailout from the EU in the wake of the sovereign debt crisis. What is your take on that and what has the Irish government done domestically to handle this crisis?
Kenneth Thompson (KT): What the Irish government has done is trying to correct the public finances. The root cause of the problem was that we had a major boom in the property sector and a disproportionate part of our economy revolved around construction. The banks went into an over-lending spree for construction projects which resulted in the current scenario. Two years ago, the government set up a system to bail out the banks. However, we believe that we are well funded till the middle of next year. Also, there are larger interests like in the international money markets who are interested in the bonds issued. The government is working to cut public expenditure and it will soon declare a four year plan that targets cutting our public account deficit below 3% of GDP which is what EU guidelines say. Since 2008, we have made savings of up to $14 billion. We are working upfront to reduce a major portion of that deficit next year while we have aimed to save $6 billion this year.
B&E: What is the kind of external help that you are looking forward to from EU as well as non-Eurozone economies?
KT: Well, we intend to solve it on our own. We have something called the Financial Pension Fund which is a kind of sovereign wealth fund which is in a healthy state. We are also in a position to ask for support from the European Central Bank but then, in that, the international money market works with very different laws so we are focussed on improving our public expenditure which is the best we can do.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
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