Ireland to borrow more money to fund capital projects

Ireland will borrow more money to fund capital projects as the economy slows but the country is not in recession, Irish finance minister Brian Lenihan said on June 12. An end to Ireland's decade-long property boom has put the brakes on years of rapid growth, with consumer confidence at record lows and dole queues continuing to lengthen.
-- Ireland to borrow more as economic slowdown grows
-- Irish economy facing serious challenges, not in recession
Economists believe 184 billion euros ($284 billion) earmarked to bring infrastructure up to the same level as Ireland's European neighbours by 2012 will be crucial to keep the economy ticking over and sustain competitiveness. "Because of the construction slump, tax receipts have been weak this year and very tight control will have to be maintained on current government expenditure this year and next year," Lenihan told Reuters in an interview.
"Clearly, going forward, we are going to have to fund more of our capital works as a government out of borrowing again - that is clear in the present climate," Lenihan said after casting his vote in Ireland's referendum on the EU's reform treaty.
Urging voters to approve the treaty, he said "We face economic challenges and Europe provides a framework of stability for investment in Ireland. If you create uncertainty in that framework that is bad for Ireland and bad for Europe." Lenihan, who took over as finance minister last month, said the economy would grow this year but on a "very modest scale".
"A recession implies ... you have no economic growth or minus growth and we don't have that in Ireland, so we are not in recession in the technical economic sense," he said.
"But of course we are facing serious economic challenges." GDP is expected to grow by just 1.6 percent this year, according to a median forecast of 11 economists. That contrasts with 5.3 percent recorded in 2007.
"The forecasters say it will pick up in a year or two to a better level, say three or four percent," Lenihan said. "But the phenomenal days of the Celtic Tiger - when we saw eight or nine percent growth - well, those days are not with us now."