Prof Patrick Honohan told a conference in Dublin today that for small financially stressed countries such as Ireland, national growth was best served by ensuring that the public finances were on a convincingly convergent path.
The impact on confidence and the rate of interest Ireland has to pay on its debt “surely more than offsets any short term adverse impact on domestic demand from lower net public spending.”
He said some explicit reprogramming of the budgetary profile for the coming years is “clearly necessary soon” if Ireland’s debt dynamics are to be convincingly convergent.
Prof Honohan said recent movements in the yield spread or interest Ireland must pay on debt demonstrates the cost that can result if international lenders are not convinced that the budget is going to be kept on a convergent path, “as indeed the Government is committed to ensuring”.
full article here http://www.irishtimes.com/newspaper/breaking/2010/0920/breaking15.html
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