The Organisation for Economic Cooperation and Development's latest Economic Survey of Ireland, published on November 4 2009, has been welcomed by Irish Minister for Finance, Brian Lenihan, as a 'fair and balanced' assessment of the Irish economy.
The report praised efforts undertaken to reign in the state deficit, but observes that there remains a need for difficult decisions in order to implement a positive multi-year plan to this end.
The OECD Survey acknowledged that the Irish economy is currently experiencing a severe contraction due to the combined effects of the domestic economic slowdown and the unfavourable international environment.
While the report welcomed Ireland's efforts towards fiscal consolidation, it warned that "very substantial further measures" would be required. The survey went on to say that the fiscal adjustment should take place within a credible multi-year framework as the government has outlined. It also stated that there is scope for efficiency-improving measures, focusing on improving value for money and modernising the public services.
In relation to the financial sector, the OECD believes that the priority is to return the banking sector to good health, and that the proposal to establish a state-owned 'bad bank' - the National Asset Management Agency (NAMA) - should be implemented as soon as possible.
Lenihan concurred with these comments. He stated that the establishment of the NAMA, together with the initiatives being pursued to restore competitiveness and to put the public finances in order, will help position Ireland to take the earliest possible advantage of the economic recovery that is beginning to take hold in the EU and in the rest of the world.
Responding to the report in a statement, Lenihan observed that:
“The economic deterioration is placing severe pressure on the public finances. The government is committed to stabilising and restoring sustainability to them. We have implemented revenue-raising and expenditure control measures equivalent to approximately 5% of GDP this year. Recently published reports by the Special Group on Public Service Numbers and Expenditure Programmes and the Commission on Taxation will feed into future government deliberations in this regard.”
He concluded: “It is important that this process continue with the stabilisation of the deficit in 2010 and this is the government’s aim. This will require difficult, but necessary, decisions to be made in Budget 2010, which will be presented to the Dáil on 9th December.”
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