“Ireland and Greece have no choice than ‘to do fairly dramatic things in as clear a manner as possible’.”

The BBC notes that credit rating agency Fitch have downgraded Ireland’s credit rating from AA- to A+ citing the recently announced cost of rescuing the Irish banking system.

RTÉ adds

The agency said it was cutting the rating to ‘A+’ from ‘AA-‘ due to what it called the greater than expected costs associated with the Government’s recapitalisation of the Irish banks, especially Anglo Irish Bank.

The agency has put a negative outlook on the rating, meaning a further downgrade is more likely over the next couple of years.

Fitch said the negative outlook was due to uncertainty about the timing and strength of an economic recovery and efforts to cut the Budget deficit.

It also warned it could lower Ireland’s rating if broad political support for measures to tackle the public finances weakened.

Fitch said the Government’s four-year budgetary plan, due in November, would be a ‘key element’ in strengthening confidence in the sustainability of the public finances.

And, “with nothing less than Irish economic sovereignty on the line”, a separate RTÉ report notes 

The International Monetary Fund has said that Ireland has no choice but to take strong and credible action to try to restore its finances.

The comments came at a news conference in Washington ahead of meetings of the IMF and World Bank in the city on Friday.

The Senior IMF Economist, Jorg Decressin, said the Irish economy was still struggling from the unwinding property boom and a banking crisis that was leading to market pressures on interest rates.

He said the IMF supported the tough measures being taken by the Government.

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  • Archie Noble

    The IMF is not a benign neutral body it represents the big banks. The best interests of the big banks are just that. Who was directly resonsible for the “unwinding property boom and a banking crisis”?

    Who is paying for the “unwinding property boom and a banking crisis”?

  • another

    How sad then that they still feel the need to mask the full extent of their debt problems; as outlined here, regarding the Greeks;

    “Increased figures for Greek national debt and deficits covering contested data from 2006 to 2009 will be published this month, the EU said on Wednesday after conducting its first invasive audit.

    “The Greek deficit and debt figures will be revised upwards, the figures will be bigger,” said Amadeu Altafaj Tardio, the spokesman for the bloc’s economic affairs commissioner Olli Rehn.

    After the EU in April slammed dodgy data provided by Greece’s previous right-wing government, the EU’s data agency Eurostat secured beefed-up powers to launch on-site inspections of countries’ books.

    “Several investigations” have now taken place in Greece since these new powers entered into force on August 19, but “after the latest visit, it was evident that some areas of uncertainty remain.”

    He added that Rehn was reinforcing resources on the ground in Greece so as to leave “no stone unturned” in the “urgent task” of discovering the true extent of Greek debt.”

  • pippakin

    Invasive Audits?

    That sounds as though the Greeks are bought and sold. I really hope it does not happen here.

  • JOHN

    Greece is doomed the government has no money. I live in Greece and my wife is a pharmacist and the goverment have not paid her in 9 months. They keep saying they will do this and that but at the end of the day there is no money for anyone. The previous governments have been up to their necks in corruption, back handers and turning a blind eye to the black market and its all caught up with them. As many people say it is a poor country but with many very very rich people.

  • Archie Noble

    When I lived in Greece the better off had tax evasion off to a fine art. Taxes were for the little people, no not the Sidhe. As John says a poor country with many very, very rich people.

  • consul

    Radical action is needed to rectify the national finances. The economy faces two main threats. One is immediate and significant, the other is staggered but collosal. We should soon know how much the immediate problem is going to cost us annually and we’ll be in a position to factor this into any plan. It’s actually the second problem that is threatening to slowly choke the life out of the country.

    The only way to avert long-term paralysis is through doing what needs to be done and facing down inevitable entrenched opposition to the requisite action. There is always resistance to change even if change is badly needed. Every system good or bad has it’s beneficiaries. The opposition to the cure will naturally come from the those who are benefitting from the current status quo. They will attempt to further their own interests at the expense of the national interest. Social partnership is a concept with great potential if it were operated in good faith from both sides. If one side is doing all the giving and the other all the taking then that’s no kind of partnership at all.

    We need to apply the same principles to the public sector that apply to the private. As far as I can see the goal of closing the deficit to 3% can only be achieved through a complete rebuild of the public sector from the ground up. If someone was commissioned to come up with a blueprint for this they would need to start with a blank page and design a new structure from scratch. This means looking at the layout of population centres in Ireland across both jurisdictions and devising the optimum structure for delivering the best services to the people for the best value.

    There are many great people doing great things in the PS, but years of using it specifically to create employment with makey uppy jobs rather than soley to provide essential services have left it bloated in many sectors. There is serious money being borrowed at prohibitive rates to pay a lot of people to do nothing. And to heat and bring services to the offices that house them. This is to say nothing of the quango a week policies for government creatures. Or the horror stories of excesses in FÁS and the HSE. The urge to shy away from what needs to be done and let things drift should be resisted. The stakes are to high for that now. If the will is there to do it, it can be done by 2014. If this is not done Ireland will remain comatose for a decade at least. You can continue to fund pretend jobs borrowing every week at rates of 7% and you can bring Ireland back to a firm financial footing but you can’t do both. Anyone who says different is a fool, a liar or both.

  • Archie Noble

    Or you could just arrest and charge the bankers with conspiracy against the state. No bail they are a flight risk. Try and convict them and sequestrate their assets as criminal gain. All the legislation is in place we just need the political will to do it. As a bonus they would grass up the politicians they bought. Round 2 more of the same.

    An elegant solution I think and a fine healthy start to deficit reduction.

  • consul

    I like that plan too. Let’s do both.