Ireland applauds Draghi's comments on fiscal policy
By Padraic Halpin
DUBLIN (Reuters) - Ireland, whose economy has made a strong recovery from bailout austerity, backed a European Central Bank call to balance tough reforms with new stimulus measures the monetary authority is studying.
In a direct call to governments to add their weight to a recovery that is stuttering in some larger euro zone economies, ECB chief Mario Draghi said on Thursday that deep economic reforms and fiscal measures were needed to stimulate demand.
Draghi made the remarks as he said falling inflation expectations, driven in part by lower-than-expected demand for oil, have led the central bank to consider a wide variety of possible measures to be unveiled as soon as December.
"I think fiscal policy and monetary policy in any euro zone country should run in tandem," Irish Finance Minister Michael Noonan told reporters, echoing Draghi's call that "monetary policy shouldn't be the only game in town."
"If you have fiscal policy contradicting monetary policy or vice versa, you don't get the kind of results we all wish for. We're at a stage now where Europe is growing again and if we can align policies it can grow stronger."
Ireland's independent fiscal watchdog has criticised the government's plans for tax cuts and a spending boost, saying it has echoes of the policies that led to a spectacular boom and bust.
With its economy set to grow by over 6 percent this year and remain the best performing in Europe for a third successive year in 2016, Ireland is already embarking on an expansionary fiscal policy.
Noonan indicated that Ireland would be pushing for more leeway in 2017 when it reviews a recently announced six-year capital investment plan that business groups have said is not sufficient to address years of under-investment.
"We hope that when we do the mid-term review of the capital programme, that there will be extra resources available for a stronger investment programme," Noonan said.
"During the recessionary period we didn't have the resources to do it; we're still correcting but we're coming very close to being a normal economy again."
(Editing by Ruth Pitchford)
