Irish PM rules out borrowing surge to boost ailing economy
Posted: 30 November 2008 0321 hrs

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DUBLIN : Prime Minister Brian Cowen ruled out a "burst" of borrowing to bail out Ireland's recession-hit economy Saturday, which is battling a bursting property bubble and the world financial crisis.

Although his opinion-poll ratings are plummeting, Cowen said it was "no time for soft options, quick fixes or political expediency", adding that Ireland faced a "critical fight" following the end of the Celtic Tiger boom.

"We cannot afford to indulge in a burst of borrowing to fund a significant increase in current spending," he told local councillors.

"We cannot afford to take an ill-judged gamble on jump-starting the economy by imposing a sharply increasing debt burden on the next generation."

Cowen said the challenge for Ireland was severe, with economic growth of six percent last year set to be followed by an expected contraction this year and next.

"Put simply, we have less money to meet growing public expenditure demands -- 6,500 million euros (8,273 million dollars) less collected in taxes in 2008 than expected," the taoiseach -- as the Irish leader is known -- said.

He aid that despite corrections in what was a hugely unpopular emergency tax-raising and cost-cutting budget in October, day-to-day expenditure next year will exceed revenue by 4.7 billion euros.

That represents more than 1,000 euros for every person in the country.

"As a national priority, we must reduce the budget deficit to a reasonable and sustainable level," Cowen said.

His comments came after British Chancellor of the Exchequer Alistair Darling earlier this week announced a 20 billion pound economic stimulus package to be funded by borrowing more and raising income tax on the wealthy from 2011.

- AFP /ls