John Bruton, who is chairman of IFSC Ireland, says that Friday's comments from the IMF on the Irish corporation tax rate will be noted by the authorities in Europe and by the French Finance Minister Christine Largarde, who is tipped to take the top job at the International Monetary Fund.
Mr Bruton was addressing the European Insurance Forum in the RDS this morning.
He reminded delegates at the conference that the IMF's Ajai Chopra said on Friday any increase in the corporation tax rate here was not part of the agreed EU/IMF programme because such an increase would not be consistent with the overall goal of the programme in sustaining growth.
Mr Bruton said that Minister Lagarde will also have noted that Irish corporation tax receipts had overperformed and are thus contributing more than expected to Ireland's loan repayment capacity.
Mr Bruton also said that Mr Chopra urged the European Union to reassure the markets by putting in place the right amount of finance, on the right terms for the right duration to support states in the euro zone who may get into difficulty.
'The truth of the modern European economy is that we are all tied together and we can either keep one another afloat or drag one another down,' Mr Bruton stated.
He said that Europe will see many more crises. 'We need political institutions in the EU that are strong enough, democratic enough, decisive enough, and inclusive enough, to face anything the future may throw at them. 'That is the enduring lesson we must take away from this crisis.
It said that the renewed nervousness on international markets about Ireland’s prospects - which have pushed Irish bond yields up again -were the ‘‘clearest setback since programme approval’’.
There was a risk, the IMF warned, that Ireland would not be able to re-enter the bond markets in 2013, as scheduled.
This, in turn, could lead to having to continue to rely on future EU and IMF funding. A ‘‘more comprehensive European plan’’ was needed to combat this risk for Ireland and other states, it said.
In addition, the ECB should make an explicit medium-term commitment to provide funding to the Irish banks, which would increase confidence among private sector lenders.
The EU and IMF will keep the government under pressure to deliver on budget targets. The EU noted that the government intended to complete a comprehensive review of expenditure in the coming months which would find additional savings and allow for the reprioritising of expenditure.
It said the spending review might allow the government the latitude to propose ‘‘some fine-tuning’’ of specific budget measures already agreed.
European Affairs Minister Lucinda Creighton described IMF comments about the need for more assistance from the EU as ‘‘very encouraging’’.
Minister of State for Finance Brian Hayes said Ireland was winning more European partners over to its side in resisting France and Germany’s insistence on a quid pro quo on Ireland’s corporate tax rate and a move on the debt burden.
But there is still a significant opposing parties around the French position and we have got to continue to work on that.
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