Honohan downplays claim of bankruptcy

CENTRAL Bank governor Patrick Honohan has downplayed Professor Morgan Kelly’s high profile dire warning of a financially dead Ireland, from earlier in the week, by defending the Government’s austere budgetary measures and denying Ireland will need IMF help.

Addressing the Joint Committee on Economic Regulatory Affairs yesterday, Professor Honohan said that, while he wasn’t denying Ireland’s poor fiscal situation, the UCD Economics professor’s vision of Ireland running out of cash, formally being bailed out by the European Central Bank, and seeing an end to all forms of lending and mass mortgage defaults — as outlined in an opinion piece in the Irish Times — “is not representative of a likely outcome”.

“Clearly, this is a time of considerable risk and balance sheet stress in Ireland. Banks, households, firms and the Government have all been under pressure and what will inevitably be a lengthy period of balance sheet repair, involving consolidation of net spending, is in progress.