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Honohan: The government's budgetary policy makes sense

The Irish Central Bank governor has said that the ‘steady course’ the government charted and stuck to has been key to restoring lender credibility.

Irish Central Bank governor Patrick Honohan.
Irish Central Bank governor Patrick Honohan.
Image: Sam Boal/Photocall Ireland

IRISH CENTRAL BANK Governor Patrick Honohan has said that the Irish government’s current budgetary policy “makes sense” and that austerity should not be confused with pragmatism.

In an opinion piece in the Irish Times today Honohan writes that a “return to stable economic growth does require a disciplined and realistic approach to balancing the national books over a credible time horizon”.

He said that consumer uncertainty about household disposable income has deterred spending and the sooner our fiscal adjustment is complete, the sooner this uncertainty will be removed.

The central bank governor said that the “steady course charted by the Irish government since 2008 in sticking to their budgetary adjustment plans has been the key to resorting international lender credibility”. This allowed the adjustment to be accomplished more gradually in Ireland than in other countries in economic trouble, he added.

Honohan asserted that Ireland has shown now that we have the ability to regain full autonomy and control over our public finance and the faster this is done, “the sooner we can get back to steady growth in employment and output”.

Read: ‘Austerity hawks’ want to use Ireland as ‘economic experiment’ – Gilmore>

Read: Ruairí Quinn: ‘The budget cut has to be less than €3.1 billion’>

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