Irish PM Cowen denies he may need to call in IMF
DUBLIN/TOKYO (Reuters) - Irish Prime Minister Brian Cowen denied reports on Wednesday he planned to call on the International Monetary Fund (IMF) to help the country's ailing economy, after a report suggesting he would knocked the euro.
The euro fell more than a cent against the dollar on Wednesday morning after Irish public broadcaster RTE reported Cowen had said Ireland may need IMF help if its economic prospects continue to deteriorate.
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."
The Irish Embassy in Japan, where Cowen is on a visit, Cowen's office in Ireland and Cowen himself, moved swiftly to deny the 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.
The euro stabilised from early losses after the denials.
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.
NOT IN NEED
Cowen's office in Dublin said that any discussion of the IMF in recent talks with trade unions had referred to the 1980s when Ireland was one of the poorest countries in western Europe.
Analysts said Ireland was far off needing IMF help.
"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.
"Contrast that with the 1980s when we had a debt to GDP ratio of 120 percent here, with frequent currency devaluations ... The situation was far, far, far worse then, and we managed to get out of it, (there is) no comparison."
Irish 10-year government bonds underperformed benchmark German Bunds on Wednesday, sending the yield spread to a fresh historic wide on worries about further deterioration in the country's public finances.
The IMF has already provided support to countries including Iceland, and European Union members Hungary and Latvia to help them deal with the consequences of a global economic downturn.
(Writing by Paul Hoskins and Jodie Ginsberg; editing by Patrick Graham)