–Must Reset Fiscal Path To Ensure ‘Virtuous Circle’
–Wider Yield Spreads Shows Need To Keep Investors Assured On Budget
LONDON (MNI) – Ireland’s budget profile needs ‘reprogramming’ soon
if international investors are to remain assured that the country will
achieve its fiscal targets in light of the additional debt incurred by
its troubled banking sector, says Central Bank of Ireland Governor
Patrick Honohan.
Honohan told a Dublin audience that:
“Some explicit reprogramming of the budgetary profile for the
coming years is clearly necessary soon if debt dynamics are to be
convincingly convergent. Recent movements in the yield spread on
Government debt – both for Ireland and for some other countries –
readily demonstrate the costs that can result unless international
lenders remain convinced that the budget is going to be kept on a
convergent path, as indeed the Government is committed to ensuring”.
He continued:
“It is important now to re-set the fiscal path to ensure a virtuous
cycle of lower borrowing rates contributing to even faster fiscal
adjustment and a lower overall cost of the adjustment to society at
large”.
–London bureau; +44-207 862 7492; email: dthomas@marketnews.com
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