Cowen defends his performance following IMF report

The IMF was clear in its report about when and how the rot started to set in on the Irish economy: “Since the start of the decade, and especially from 2005 to 2007, easy credit fostered a property bubble, bank exposures to property lending soared while reliance on wholesale funding intensified, wages rose rapidly, and international competitiveness was compromised,” the report read.

Speaking on RTE’s News at One, the Taoiseach said that he would stand over the decisions he made during his time as Minister for Finance, but that he didn’t claim to get everything right. However, he would not accept that he had sown the seeds for the difficulty that the country now finds itself in during his time as Minister for Finance.

“All the decisions taken at the time were taken in the context of what the best advice and indications and forecasts were,” the Taoiseach said, pointing out that the IMF reports in 2007, 2006 and 2005 commended the Government for running a good policy.

If you looked at the reports from the IMF or the EU Commission during that period, “it appeared we were getting an awful lot more right that what was going wrong”, he said.

“I’ve got more right than I got wrong. I reduced the national debt, I increased social spending in areas that needed to be increased, and I stand over it,” the Taoiseach said.

He also pointed out that during the boom years, when the Irish economy was surging was forward, nobody was suggesting higher taxes, “even on the Opposition benches”.

The Taoiseach insisted that his Government had a job to do to get Ireland out of the current economic strife it is now facing, and that it was going to get on and do it. He said that he intends to maintain majority support in the Dáil and that he would put his judgement to the people at the end of his tenure.

The Taoiseach said the Government would stay the course for another three years. “We have a plan in place that we need to implement. It’s not going to be easy, but it has to be done.”

The IMF’s assessment of the Irish economy in its annual staff report was bleak. Following years as a “star performer”, Ireland is in now the midst of an unprecedented economic correction as severe as the worst economic distresses faced following the Second World War, it said.

It forecast the Irish economy would shrink the most of all advanced economies with a contraction of 13.5pc from 2008 through to 2010, and that unemployment would climb to 15.5pc next year.

The IMF described how “dazzling growth and buoyant public revenues prompted tax reductions and expansion of public expenditures that have proved unsustainable”.

The Washington-based institution also highlighted that warnings had been issued by it and various commentators that the “seemingly-unstoppable growth masked serious imbalances, including the fragility of public finances”.

The Dáil is due to debate the IMF report on Friday, 3 July.