IMF praises Govt 'sound policies'
The Government has been praised by the International Monetary Fund for its “sound policies” during the post-Celtic Tiger boom.
The IMF said the Government had “an exemplary track record” in the face of the downturn, which had resulted in “a dynamic, open and robust economy, and resilience to external shocks.”
But the organisation also underlined the need to reduce inflation, improve competitiveness and secure the medium-term fiscal position.
And it pointed to a “significant risk” that house prices could be overvalued in view of the continuing property boom, and said a sharp rise in unemployment could pose risks to the housing market.
The IMF commendation – which followed a series of recent gloomy pointers on the economic front – was welcomed by Minister for Finance Charlie McCreevy, who called the report “a balanced and positive assessment of Ireland’s economic policies and prospects.”
He added: “I agree with the IMF board’s view that the likelihood of slower growth in the period ahead requires us to get our prices and cost increases more in line with our European Union partners in order to improve our economic position.”
Presenting its annual review of the Irish economy, the IMF forecast a gradual recovery in growth this year in line with the expected pick-up in the global economy, with Gross National Product projected to grow by 1.5% in 2003 and about 3% next year.
It emphasised, however, that there were risks to that outlook, noting that the global recovery could be “more anaemic than expected” and the euro could continue to appreciate, adversely affecting competitiveness.
The review urged moderate wage growth in order to preserve competitiveness and avoid risks to output and employment.
Yesterday, the government reported a deficit at the end of last month of almost €240m, compared to a surplus of €1.8bn at the same time last year.
Last week, the Central Statistics Office said the unemployment rate was 4.8%, the highest in almost four years.
