Irish Minister of Finance, Brian Cowen has this week welcomed the OECD’s
generally positive assessment of the Irish economy.
Commenting on the Report, Cowen observed that:
“The OECD, while recognising the challenges facing Ireland in the period
ahead, acknowledges the remarkable performance of the Irish economy over the
past decade."
"It states that the fundamentals including - a skilled workforce,
a flexible labour market, moderate taxation, a business-friendly regulatory
environment and a sound fiscal position – all remain strong. Of particular
note is the OECD’s assessment that Irish fiscal plans remain prudent overall.”
In terms of recommendations, the OECD made a number of specific suggestions, and
these will now be reflected upon in the context of future policy formulation, the Finance Minister went on to explain.
Specifically, the OECD highlighted the need to raise productivity growth as
a key long-term challenge to the Irish economy, and argued that wage moderation is needed
to avoid a weakening of export performance. Mr Cowen expressed agreement with this assessment.
In commenting on the Republic's fiscal position, the OECD noted that the rate of public
spending needs to slow, and that it is important not to lock-in expensive spending
commitments.
Cowen accepted this advice in view of the present economic climate.
Additionally, Cowen noted the OECD assessment that, while a correction to the
very strong Irish housing market was necessary, the downswing is expected
to be short-lived.
In terms of the tax treatment of housing, he also noted the
views of the OECD, and said that this issue needs to be seen in the wider
economic and social context.
Mr Cowen welcomed the OECD’s assessment that Irish banks are profitable
and well capitalised. The OECD observed that rapid economic growth had provided
extensive earnings opportunities for Irish banks, ensuring they are well positioned
to deal with recent developments.
Additionally, Cowen welcomed the OECD’s view of the Central Bank and Financial
Services Authority of Ireland as a highly respected institution that has acted
in a timely manner to contain risks.
With regard to long term planning, the report highlighted the potentially significant
impact of ageing for Ireland.
Finally, Cowen pointed out that the rationale for publishing the Green Paper
on Pensions last year was to stimulate debate on how to address the challenge
of sustainability. The findings of the OECD will be a useful input in that context.
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