European Central Bank president, Mr Wim Duisenberg, today joined criticism of the Government's plans to cut taxes and increase spending at a time of high inflation.
The European Commission's public scolding of the Government's policy on January 24th was fully justified, he said.
"Clearly, the budget plans of the Irish government are out of line with the guidelines they previously agreed," Mr Duisenberg told a news conference.
Mr Duisenberg said he "fully" understood the European Union's decision to take Ireland to task over the issue.
The European Commission formally recommended that Ireland revise its economic policy. It warned of a possible "overheating" of its economy and risks of inflation in contradiction with the euro-zone stability pact.
It was the first time the commission had singled out one country in the 12-nation euro zone for such a recommendation, and amounted to a strong criticism of the Government's economic policy.
The Government later mounted a vehement defence and insisted that there would be no changes in budget policy.
But Ireland's economic plans also drew fire from elsewhere.
German Finance Minister Hans Eichel said yesterday that the euro-zone national governments "have a responsibility not to pour oil on the flames (of inflation) via their fiscal and budgetary policy. But that is what is happening in Ireland."
Euro-zone countries had to keep in mind that the European Central Bank could only implement monetary policy for the euro area as a whole, Mr Eichel said. It was up to the individual governments to use local means to tackle their inflation problems.
AFP