Economists warn move is ‘short-term political gamble’
Despite Coalition claims that there are is a “benign window” and it is timely for Ireland to regain its status as a normal eurozone member, commentators told the Irish Examiner they had concerns no economic “insurance policy” was being put in place.
* Economist David McWilliams said: “It’s extraordinary they don’t bother putting insurance in place on a non-recourse basis. We don’t know why they are gambling.
“There’s going to be a huge cash call from the banks next year. What if the banks need more? Would it not be smarter to have €10bn there on a non-recourse basis?
“They feel they’ll get a bounce in the polls from a clear bailout. It’s a short-term gamble. The worst investment decisions are made in the best of times. Nobody is of the view that this banking crisis is over.”
* Former IMF deputy director Donal Donovan, who sits on the fiscal advisory council, said: “There’s considerable merit in getting a precautionary credit line with the right terms and conditions. It’s a backstop against events outside of our control which might create external financial pressures.
“The conditions would unlikely differ substantially under the current rules and commitments in the Government’s own future plans and would also continue the unfinished bailout programme issues. There’s also some merit in having external pressure on us to continue reforms.”
* Lecturer and economist Constantine Gurdgiev said: “We haven’t put in any real reform. With the real troika gone, we will have no incentive for reforms and the big question is can we reform sectors like the legal, energy, transport and health care?
“It’s all been done for political reasons. A lot of questions to be answered. You don’t gamble with the long-term sustainability of a country’s debt. The only long-term value is for the political leaders.”
