DUBLIN, Jan 3 (Reuters) - Ireland needs up to five years to bring tax revenues and current spending back to balance after recession has replaced a decade of spectacular growth, Prime Minister Brian Cowen was quoted as saying on Saturday.
Ireland was the first euro zone country to slip into recession last year and despite a surprise rebound in the third quarter the government has forecast the economy will shrink between 3 to 4 percent in 2009.
The government has also projected a budget deficit of 7.25 percent of gross domestic product (GDP) this year, more than twice the 3-percent limit allowed by the European Union.
'I think we just have to, over a period of time, more likely five years than three years in my opinion, bring that equilibrium back between the current spend and the tax revenue,' Cowen told the Irish Times newspaper in an interview.
'You can then continue to borrow for capital investment purposes,' Cowen added.
This year Ireland will issue more than 20 billion euros ($27.77 billion) of debt in a series of bond auctions and syndicated bonds which could boost national debt by half, the National Treasury Management Agency (NTMA) said on Wednesday.
It will issue at least 1.5 billion euros more debt than planned at the time of the 2009 budget presentation as the government plans to borrow 1.5 billion to recapitalise banks, with further issuance possible as the economy deteriorates.
The government plans to take a further 4 billion euros from the National Pensions Reserve Fund, set aside in the 'Celtic Tiger' years to fund pension and welfare costs after 2025, to pay for the bailout of three of the country's biggest banks.
'We are in a recession,' Cowen said. 'The fact that it is such a global recession makes it harder because we depend on selling into these markets,' he said, pointing to the strength of the euro versus sterling as one of the main problems.
(Reporting by Andras Gergely; editing by Chris Pizzey)~ Keywords: IRELAND BUDGET/ (andras.gergely@reuters.com; +35315001518; Reuters Messaging: andras.gergely.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Ireland was the first euro zone country to slip into recession last year and despite a surprise rebound in the third quarter the government has forecast the economy will shrink between 3 to 4 percent in 2009.
The government has also projected a budget deficit of 7.25 percent of gross domestic product (GDP) this year, more than twice the 3-percent limit allowed by the European Union.
'I think we just have to, over a period of time, more likely five years than three years in my opinion, bring that equilibrium back between the current spend and the tax revenue,' Cowen told the Irish Times newspaper in an interview.
'You can then continue to borrow for capital investment purposes,' Cowen added.
This year Ireland will issue more than 20 billion euros ($27.77 billion) of debt in a series of bond auctions and syndicated bonds which could boost national debt by half, the National Treasury Management Agency (NTMA) said on Wednesday.
It will issue at least 1.5 billion euros more debt than planned at the time of the 2009 budget presentation as the government plans to borrow 1.5 billion to recapitalise banks, with further issuance possible as the economy deteriorates.
The government plans to take a further 4 billion euros from the National Pensions Reserve Fund, set aside in the 'Celtic Tiger' years to fund pension and welfare costs after 2025, to pay for the bailout of three of the country's biggest banks.
'We are in a recession,' Cowen said. 'The fact that it is such a global recession makes it harder because we depend on selling into these markets,' he said, pointing to the strength of the euro versus sterling as one of the main problems.
(Reporting by Andras Gergely; editing by Chris Pizzey)~ Keywords: IRELAND BUDGET/ (andras.gergely@reuters.com; +35315001518; Reuters Messaging: andras.gergely.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
