Moody’s is monitoring Ireland’s new
government’s attempts to win easier terms for its loans under an EU/IMF rescue
deal and signalled that another rating cut was not imminent.
Ireland’s Taoiseach-elect Enda
Kenny is seeking better repayment terms on the bailout package.
Moody’s cut Ireland’s rating by five notches
to Baa1 in December and put the country on negative outlook, meaning more
downgrades could follow, amid fears further bank losses will hit the public
purse and further weaken economic growth prospects.
“The negative outlook reflects
… risks in the next 12 to 18 months. We are currently monitoring how things
develop in Ireland and we will act when deemed appropriate,” Dietmar
Hornung, vice president and senior credit officer at Moody’s said.
Kenny has less than three weeks to
persuade Germany to reduce the interest rate on the EU’s 40 billion euros plus
contribution and give the government more time to restructure its banks before
a hoped-for EU-wide deal on the debt crisis is hammered out at a 24-25 March summit.
Hornung said he would assess the
impact of any concessions Ireland might be able to win from Europe but said he
did not expect the overall targets in the EU/IMF deal to be altered.
Ireland’s new government said over
the weekend it would adhere to the fiscal goals laid down in the agreement.
The current Baa1 rating is on the
basis of the EU/IMF support package as it is and if there are amendments we
will look into them.”
Ireland has pledged to shrink its
budget deficit; currently proportionally the highest in the euro zone, to 9.4
per cent of gross domestic product this year from nearly 12 per cent last year
but weak consumer demand could hamper its goal.