We must try to maintain positive momentum

Looking back over the events of the past seven years, it is hard to believe the Irish economy and its financial system finds itself in the situation that it is in.

I certainly feared back in 2010 that if a firm grasp was not taken of the public finances, Ireland was on the road to bankruptcy at worst, or partial debt default at best. Bond yields had soared to levels that effectively made it impossible to fund the unsustainable borrowing requirement that it had. At the end of 2010, the troika stepped in and provided Ireland with the €67.5bn that would be required to run the country over the following three years.

In return for this, the parties to the troika insisted on a number of conditions, the most important of which was the commitment to reduce the annual borrowing requirement to 3% of GDP by the end of 2015.

While the troika has come in for intense criticism from certain quarters, the reality is it provided us with the funding needed to run the country when nobody else would. Surprise, surprise, they insisted on certain conditions that would increase the probability of getting paid back.

If the funding had not been provided, Ireland would have had to bridge a gap of more than €25bn overnight, which would have necessitated massive cuts in public expenditure and a massive hike in taxation. This would have been sufficient to blow the country off the face of the planet, metaphorically speaking, and quite simply was not a feasible option.

I would accept that the decision to place the €34bn or thereabouts injected into Anglo Irish Bank and Irish Nationwide onto the national balance sheet was a disastrous mistake that our policymakers should never have agreed to, but which in my view was forced upon Ireland by external forces

However, our policymakers did agree to it and the rest is history. It is essential our current policymakers continue to seek to have this debt removed from the national balance sheet, but meanwhile, there is little to be gained by crying over spilt milk.

Unfortunately, there is still a lot of crying being done over that spilt milk. It is very visible on lamp posts and poles all over the country.

While it is fine in theory being anti-austerity — in fact there are some people out there who appear to be anti-everything this government or any other government might do — viable alternatives are necessary but are not forthcoming. If one accepts that previous policymakers made a big mistake, then Ireland had no choice other than to proceed with the fiscal consolidation process in play since 2008.

The current government did itself no favours with some of the promises it made before the election in 2011, but there was no choice other than to continue with the fiscal correction once it assumed power. Quite simply the country was costing too much to run and was not collecting enough revenue, so serious attempts had to be made to live within our means.

The policy is working, although some will never be prepared to admit it. Growth is starting to get modestly better and the budget deficit is being reduced. Significantly, we exited the EU/IMF programme in December and did not avail of the emergency credit line.

The National Treasury Management Agency has had four successful bond auctions. In total, €6.5bn has been raised, over 80% of the full-year funding target of €8bn. The most recent 10-year bond auction in early May raised €750m at a rate of 2.73%. Moody’s upgraded Ireland’s credit rating in January, and along with the general trend in peripheral bond markets, has helped push yields down.

Despite the challenges, the external view of Ireland is now much more positive and somewhat bizarrely, we are now able to borrow more cheaply than the UK. Who would have thought?