Lagarde says ‘good news on the horizon’

Christine Lagarde, IMF chief who is in Dublin today said that she believes that there is “good news” on the horizon for Ireland.

Speaking at a press conference in Government Buildings with Tanaiste and Minister for Foreign Affairs Eamon Gilmore and Minister for Finance Michael Noonan, Ms Lagarde said Ireland was one of the few countries in the eurozone showing positive growth numbers.

“There are results around the corner. While it has been very hard there is clearly good news on the horizon,” she said.

Ms Lagarde said the IMF had been on the side of Ireland “through the toughest times” and would “stay available and on call”.

She said the imperative was helping Ireland exit its bailout programme successfully.

Yesterday, she said that Europe should do all it can to assist Portugal and Ireland’s return to financial markets, not limiting its help to just extending loans under their EU/IMF bailouts.

“I would be cautious not to limit it to an extension,” she said in an interview with the Irish Times newspaper today, a day ahead of an official visit to the country – her first mission to a bailed-out euro zone state.

She also said policymakers should guard against complacency after the global economy came close to collapse last year, given the risk of a relapse.

Ireland and Portugal, which have both stuck closely to the economically painful terms set out by their international lenders, have in return asked for the bailout loans to be extended.

European Union finance ministers sought advice on Tuesday on how to help the countries demonstrate the success of their bailout programmes by returning to international debt markets.

Referring to those deliberations, Lagarde added: “I think it has really been refined yesterday during the discussions as an adjustment that might include very much an extension of the maturities but is not limited only to the extension of maturities.”

Referring to Ireland, she said “any avenue” should be explored that supported the country’s return to economic growth and self-sufficiency.

Lagarde arrives in Ireland on Friday to meet with authorities aiming for a successful exit from the bailout programme at the end of the year.

The newspaper quoted her as saying that there was not much more that could be done on interest rates but that “financial people can think of lots of things”. Pushing out Ireland’s bailout repayments to the end of the term was one option.

The IMF has been pushing Europe for over a year to provide further help to Ireland and has urged that euro zone rescue funds be allowed to retrospectively recapitalise Irish banks, saying failure to do so could revive market doubts about Irish debt sustainability.

Lagarde also said caution was needed to prevent a “relapse” into a global financial meltdown following last year’s close call.

The euro zone economy woes have stabilised in recent months since last year’s Greek crisis but an inconclusive election in Italy last week signalled another pothole in the stuttering global post-crisis recovery.

“Clearly the world economy avoided collapse last year and I am very concerned that, by moving into a semi-complacent mood, people risk a relapse,” said Lagarde.