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Friday 15 December 2017

Coalition blew chance to get debt deal - Mody

Ashoka Mody who addressed the banking inquiry
Ashoka Mody who addressed the banking inquiry

THE Irish Government blew an opportunity to get a debt write-down deal and a "slower pace of austerity" from the troika when it took office four years ago, the former IMF chief of mission to Ireland has said.

Ashoka Mody, an economist and a visiting professor at Princeton University, also suggested that the debt accumulated by the previous government was "odious debt" that arguably should not have to be repaid.

"When this (Irish) government came in it had a mandate," Mr Mody told Newstalk in an interview.

"What the deal at that time could have been, I don't know but it should certainly have been a superior deal. That deal would have required a clear premise on some amount of debt restructuring," he added.

While the Government has claimed it has already received a number of concessions from Europe, including the promissory note deal on the former Anglo Irish Bank, many believe it should have held out for a debt write-down.

"There was a burden of debt that would legitimately be declared as an odious debt and this was not necessarily because there was something unique about this particular government but because there had been severe and egregious errors that it inherited," Mr Mody said.

Mr Mody also said he was confident that Greece will eventually restructure its debts but he warned against a "bogus restructuring" whereby the country's problems would not be sorted out properly.

"It's not in anyone's interest to draw this out," he said.

"The longer it lasts the longer the political discontent, it's not just in Greece.

"The fact that the Greek government is much maligned in Europe is not a surprise."

Speaking recently, Finance Minister Michael Noonan said Ireland's debt is sustainable - "evidenced by the fact that borrowing costs are the lowest on record."

Ireland's debt-to-GDP ratio peaked in 2013 at 123pc and fell to an estimated 110pc last year, he said.

The latest figures show the Greek ratio at about 170pc.

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