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Ratings Downgrade an Indictment of Government Banking Policy- Morgan

19 July, 2010

Speaking today after credit agency Moodys downgraded Ireland's government bond ratings, Sinn Féin Spokesperson on Finance Arthur Morgan said that this was an indictment of the inadequacy of Government policy concerning the banks. Deputy Morgan also said that the effect of this downgrade would be crippling for the whole economy as the higher cost of borrowing would lead to a further restriction in credit for SMEs and households.

Deputy Morgan said:

“The cost of borrowing will increase for the Irish Government as a result of their unfettered allegiance to an ailing banking system and especially the zombie Anglo Irish bank. Once more, the inadequacy of Government policy concerning the banks has been revealed.

“The consequences for the wider Irish economy of this downgrade will be crippling- the increase in the cost of borrowing for the Government will manifest across the whole economy. Access to credit will become further restricted to SMEs and households as the ripple effect takes hold.

“The Government’s home grown crisis, which has produced weak banking and property sectors, is once more curbing economic growth. The ratings agency attributed the Government's gradual but significant loss of financial strength for the downgrade. Propping up zombie banks comes at a high cost to the ordinary people of this State.

“This Government will be paying a higher price for borrowing on the international markets, borrowing that is being done to plug the massive hole in the public finance left from pumping billions of euro in the banks and to keep Anglo on life-support.

“The Minister needs to wake up and realise that the Government are prolonging our crisis. Today’s reaction by Moodys to the Governments banking policy is an indictment that their approach is failing as international confidence is falling dramatically. It is time the Government reordered their priorities and placed less emphasis on redundant banks like Anglo Irish and more on domestic recovery through job creation.” ENDS

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