IMF distances itself from Ashoka Mody comments on Ireland

The International Monetary Fund has distanced itself from comments made by its former chief of mission to Ireland Ashoka Mody.

Mr Mody had said austerity was a “potentially self-defeating policy” because of the lack of growth and no reduction in debt levels it had resulted in.

He told RTÉ's This Week programme that the likelihood of Ireland getting money back from the European Stability Mechanism for its legacy banking debt was "almost zero".

He also said Ireland should consider greatly reducing the policy of austerity.

However, the IMF today distanced itself from these comments saying: “Mr Mody has retired from the IMF and his views do not represent the Fund’s position.”

This morning Tánaiste Eamon Gilmore said the Government realises Ireland’s route to economic recovery cannot be based on austerity alone.

Reacting to comments by Mr Mody, that austerity must end for the economy to grow, Mr Gilmore said: “when the Government was formed we determined that the route to recovery could not just be by budget consolidation alone. There had to be a strategy for jobs and growth.”

He said the government had been pursuing a strategy to boost the economy and getting growth into the economy.

“That is why we brought in last year a stimulus package announced by Brendan Howlin. That is why we have brought forward the action plan on jobs.”

Mr Gilmore said the Government was going to continue negotiating to secure the best possible deal for the Irish taxpayer reduce as much as possible the burden on the Irish taxpayer.

“..At the beginning of the lifetime of this Government about renegotiating the bailout deal we were told it can’t be done. We have renegotiated the bailout deal. When we sought a reduction in our interest rate we were told it can’t be done. We secured a reduction in our interest rate, far greater in fact than most people expected.”

Asked whether Ireland should implement a €3.1 billion reduction in spending in this year’s budget demanded by the EU-IMF troika, Mr Mody said this figure should be “considerably lowered”.

“I would even ask the question why can we not imagine and consider the possibility that for the next three years, as an experiment, there be no further fiscal consolidation,” he said yesterday.

Mr Gilmore also criticised Fianna Fáil following claims by the party that Taoiseach Enda Kenny mislead the Dáil over his contacts with Anglo Irish Bank executives while he was leader of the Opposition.

"Fianna Fáil are in no position to ask any questions of anybody about this or make any remarks about hypocrisy. The only hypocrisy in all this is Fianna Fáil," he told RTÉ's Morning Ireland programme.