Irish PM Denies Report He May Need To Call In IMF

Cowen`s office in Dublin also denied that he had made any reference to IMF help.

Ireland's Prime Minister Brian Cowen on Wednesday denied he might call on the International Monetary Fund (IMF) for economic help, dismissing an earlier media report which weakened the euro.

The IMF said it had no reason to think its help would be needed in Ireland, one of 16 members of the euro currency bloc. [ID:nLG289182] It has already provided support for countries in the region including Iceland, Hungary and Latvia, which have their own national currencies.

The euro fell over 1-1/2 cents against the dollar <EUR=> after Irish public broadcaster RTE reported on Wednesday morning that Cowen had said Ireland may need IMF help if its economic prospects continue to deteriorate. The currency remained weak later in the day on deepening fears about the global economy.

RTE initially said on its Web site: "Brian Cowen has confirmed that the International Monetary Fund could be called in if the economy continues to worsen". A later RTE radio news bulletin said RTE's initial report had been incorrect.

The Irish Embassy in Japan, where Cowen is on a visit, Cowen's office in Ireland and Cowen himself all moved swiftly to deny the initial report, which was picked up by other media outlets.

"I have never said that," Cowen told Reuters in Tokyo when asked about the report.

"We are a member of the euro area and we have the best-performing economy in the last 10 years in the European Union," he said before attending a reception at a Tokyo hotel.

Defence Minister Willie O'Dea said it was "scaremongering".

"There is no question of the IMF having to intervene in any way in the Irish economy and talk like that is grossly irresponsible," O'Dea said.

The furore over what it called "inaccurate reports" led Ireland's finance ministry to issue a statement stressing its net debt position was relatively low by global comparison.

The ministry also reiterated it was determined to cut the country's budget deficit to ensure the stability and sustainability of public finances.

"In assessing Ireland's ability to address the challenges ahead it is important to note that Ireland's net debt position of 20 percent of GDP at end-2008 is relatively low," a spokesman said in a statement.

The former "Celtic Tiger" has suffered a stunning reversal of fortune as a domestic property crash and global slump plunged it into recession, forcing the state to bail out the three largest banks and borrow heavily to fund spending.

Ratings agency Standard & Poor's warned on Friday it may cut Ireland's AAA sovereign debt rating due to worsening public finances [ID:nL9497790]

NOT IN NEED

Economists expect Ireland's recession to deepen this year, and this month the government raised its budget deficit forecast for 2009 to 9.5 percent of GDP, more than triple the EU limit, adding that it was only expected to fall below the 3 percent limit in 2013.

However, an IMF spokesman said there was no reason to think that Ireland would require IMF help.

"The authorities have been clear today. We agree. There is no reason to think that IMF financing will be needed," the spokesman, William Murray, said.

Moody's senior analyst Dietmar Hornung told Reuters possible IMF funding was "definitely not an issue". [ID:nLE477884]

Others agreed. "There is no indication that there is a lack of appetite from investors to buy Irish government bonds," said Oliver Mangan, Chief Bond Economist at AIB Global Treasury.

Even so, Irish 10-year government bonds underperformed benchmark German Bunds on Wednesday, sending the yield spread to a fresh historic wide.