Economic recovery must co-incide with €15bn plan: Honohan

CENTRAL Bank chief Patrick Honohan has warned that if the economy doesn’t recover at a relatively strong pace in the coming years then the Government’s ability to deliver the €15bn four-year budgetary/fiscal adjustment could be under threat.

“If economic growth recovers as it did in the late 1980s — when debt and deficit levels were as high — then delivering the needed multi-year fiscal adjustment will be well within the economy’s capacity. But a weaker economic recovery could exacerbate what some in the market interpret as a debt overhang,” Professor Honohan said in a Financial Times article.

Many economists, as well as the Central Bank have already lowered their forecasts for the country’s economic growth