The Minister of Finance, Mr. Brian Lenihan TD, welcomed the publication today (24 June 2009) by the Executive Board of the International Monetary Fund (IMF) of the annual Article IV assessment of the Irish economy. This year the report focuses on the difficulties facing the Irish economy and the banking sector, the actions being taken to deal with these and priorities for further action.

Commenting on the report today the Minister for Finance, Mr. Brian Lenihan TD said that:

“I welcome the IMF report published today. This report is both a balanced and realistic assessment of the challenges we face, and also endorses the actions that we are taking. The IMF has highlighted the unprecedented nature of Ireland’s current difficulties, the scale of the correction needed to address them and also identifies the risks that remain to overall economic and fiscal recovery.

In particular, I welcome and note the significance of the fact that the IMF has stated that on the two fronts that matter most – the healing of the financial sector and the correction of the budgetary situation – the Irish Government has moved in the right direction. The Government is continuing to take the right steps to resolve our financial difficulties and to stabilise and restore our economy.

The IMF correctly identify that we need to improve our competitiveness position. The Government is very aware of this issue and is committed to doing just that. The recent declines in our price levels and Government action in terms of public sector wage rates are significant steps in the ongoing measures to improve our overall competitiveness.

On budgetary matters, the IMF notes that the approach and elements of Ireland’s budgetary plan are appropriate. In terms of the future necessary fiscal adjustments I agree with the IMF’s analysis that the focus must be more on expenditure than taxation.

On the financial sector, I welcome the IMF’s acknowledgement that we have taken important steps to stabilise the financial system through the bank guarantee and that they have endorsed our decision to set up the National Asset Management Agency. I also welcome the IMF’s assessment that if well managed, the distressed assets acquired by NAMA could over time produce a recovery value to compensate for the initial fiscal outlays.

Furthermore, I agree with the IMF that we need to continue our efforts to provide a supportive regulatory and supervisory regime. To that end we will also continue to work with our European colleagues.”

The Minister also noted that the IMF Article IV report provides an important endorsement for the policies that the Government has been implementing to deal with the twin crises affecting the economy and the financial sector.

Notes for Editors

The Public Information Notice summarising the views of the IMF Board, together with the relevant Staff Article IV annual Report, are being placed on the Fund’s website: www.imf.org.