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EU/IMF imposed debt not sustainable - Doherty

18 April, 2011 - by Pearse Doherty TD

As speculation mounts that Greece is about to restructure its EU/IMF bailout debt, Sinn Fein Finance spokesperson Pearse Doherty TD has described Irelands debt as ‘unsustainable’ and said that ‘it is time for the bondholders to shoulder their fair share of the burden.’

Speaking this morning Deputy Doherty said:

‘Throughout the weekend there was speculation that Greece was seeking to restructure the terms and timescale of its EU/IMF bailout loans. While IMF sources are denying that debt-restructuring is on the cards, most sources believe that it is only a matter of time before new debt servicing arrangements, including a possible 30 year extension on the repayment period, is agreed.

‘This is a truly worrying development. Ireland followed Greece into the EU/IMF bailout programme. As our debt to GDP ratio continues to spiral out of control we look set to follow Greece again, this time into a debt restructuring agreement which will cripple the economy for decades.

‘At this point we have two clear choices. To continue with the Fine Gael-Labour politics of denial, pretending that the rising debt levels are manageable. Or we can outline an alternative path to that imposed by the EU/IMF, in which senior bondholders shoulder their fair share of the pain in order to reduce the debt burden on the Irish taxpayer.

‘Under the terms of the EU/IMF deal our Debt to GDP ratio is expected to peak 120.5% in 2013 and then start to fall. This is based on assumptions regarding growth, interest rates, deficit reduction targets and bank recapitalisation requirements.

‘All of the four assumptions that underpin the EU/IMF debt sustainability projections are already being undermined by events. Growth projections are down, interest rates are up, deficit reduction targets are being missed & bank recapitalisations are high.

‘While our Government and their colleagues in the EU and IMF are behaving like all is going to plan, the Markets think otherwise and simply do not believe that the figures add up.

‘The economics of austerity and socialising the losses of private banks is not working. It is blocking investment in jobs, forcing more people into unemployment, and draining much needed resources away from investment in education and health in order to service toxic private sector loans.

‘We urgently need an alternative approach if we are to avoid the fate of Greece, who look set to turn a lost decade into a lost generation, forced to service debts for up to 30 years rather than investing in jobs and services.’

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