The International Monetary Fund has warned that debt-hit states including Ireland need what it describes as “unrelenting” reform to prevent the current crisis spreading and has called on the European Central Bank to hold fire on interest rate rises.
It has estimated that the 17 member eurozone will see economic growth of 1.7 per cent this year and 1.9 per cent in 2012 as long as debt crises do not harm the economy. As such it has urged the EU and member states to strengthen banks that need bigger cash cushions against a further downturn.
The Irish Republic has already benefited from around $74.44billion of International Monetary Fund Aid and now the Washington-based organisation believes reform efforts are needed at national level. Many banks in Ireland, Greece and Portugal are also being kept afloat by liquidity provided by the ECB.
In Greece, it has been determined the country does not have to restructure its debt. However, that assessment was made in February and now a new audit is being carried out with analysts warning there may be further issues with the health of the country. With weak growth and sizeable financial slippages it is feared current debt dynamics may be unsustainable and the countdown to restructuring is under way.
Now the IMF has called on European leaders to bolster the powers of the European Financial Stability Facility and the European Stability Mechanism. Commitments have already been made to improve lending facilities and pricing. It is also believed that there is no need for further interest rate rises after the European Central Bank raised eurozone rates to 1.25 per cent from the previous low of one per cent in April.
Earlier this week it was reported by the Irish League of Credit Unions that as many as one in five Irish citizens have as little as €70 to spend as disposable income once all of their essential bills have been paid. With the Irish economy unlikely to rebound in the foreseeable future, it places added emphasis on consumers to ensure their money goes further and to take a thorough approach to their finances.
Reducing non-essential spending is one step. Think about what you really need to buy each month and budget accordingly. Consider moving to online shopping where prices are generally cheaper, and look out for promo codes to reduce spending further. Remember to use promo codes appropriately by applying them to items you were going to buy anyway, rather than using them on additional purchases.
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