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Ireland's Sovereign Debt Crisis

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About this Event

18 May 2011 @ 12:45

You can download Karl Whelan's PowerPoint presentation in PDF format here.


Watch a short video of Prof. Whelan talking about Ireland's situation here.

 

Watch the full presentation speech in the video section to the left.

 

About the Event:

At this roundtable meeting of the IIEA Economists Group, Prof. Karl Whelan delivered a presentation on Ireland's Sovereign Debt Crisis.

Prof. Whelan first presented Ireland's fiscal plans and reviewed the official outlook from the Government, European Commission and IMF. He then discussed the key downside risks that could affect those plans, which include a dimming of the growth outlook, an unsustainable interest burden, and continued uncertainty or a further deterioration in the banking system.

Prof. Whelan then discussed the implications of a further EU-IMF deal for Ireland, which is likely to become necessary at some point. He noted that a second deal would involve the European Stability Mechanism, which is set to have preferred creditor status. This status, combined with the preferred status of IMF loans, will cause private investors to become even more wary about buying Irish bonds. The absence of private investors would make it very difficult for Ireland to escape the ESM and to return to the bond markets on normal terms. A situation whereby the majority of new Irish debt is owned by EU institutions and the IMF is desirable neither for Ireland nor its European partners.

He concluded by noting that current events in Greece are likely to have a great effect on the EU's future approach to sovereign debt problems. If a 'soft restructuring' of some sort occurs in Greece without calamitous result, then this approach will begin to look more attractive as a solution to Ireland's situation.

In the event that the EU does propose a debt restructuring, Ireland needs to think very carefully about its strategy.


About the Speaker:

Karl Whelan is a Professor at the School of Economics, University College Dublin. After obtaining his PhD from MIT in 1997, he worked for over ten years in central banks, first at the Federal Reserve Board in Washington and then at the Central Bank of Ireland. His research is generally concentrated in applied macroeconomics and has been published in leading journals such as American Economic Review, Review of Economics and Statistics, Journal of Monetary Economics, and Journal of Money, Credit, and Banking. Prof. Whelan is a regular contributor at irisheconomy.ie and was recently made a fellow of the Royal Irish Academy.

 

This content forms part of the E View project, which is part-funded by DG Communication of the European Parliament. 

 

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