Banks must not use stress tests as excuse to delay dealing with mortgage crisis

Fianna Fáil Spokesperson on Finance Michael McGrath has welcomed the decision of ratings agency Moody’s to upgrade Ireland’s bond rating to investment grade.

Deputy McGrath said: “This is an overdue decision and largely reflects Moody’s catching up with the other ratings agencies and the market generally which had already taken a more favourable view of the prospects for Irish bonds.

“The return to the markets earlier this month was a positive development demonstrating the more benign conditions for countries which had faced difficulty in raising funds on the markets. The key challenge now is to maintain market access.

“The figures released on Friday by the CSO showed our debt at very high levels. This demonstrates two key challenges in the year ahead. Firstly to secure a deal on the legacy bank debt and secondly to accelerate economic growth.

“We should not be deflected from efforts to achieve relief on the bank debt by the comments of either President Barroso or Klaus Regling of the ESM. Ireland has a strong moral and practical argument for alleviation of the cost of the banking collapse and the case for this must continue to be made until practical effect is given to the June 2012 summit commitment to break the link between sovereign and bank debt.

“The prospects for growth in the economy depend to a large degree on restoring a functioning banking sector and improving export performance. The bank stress tests later this year must not be used by the banks to retreat from resolving the mortgage arrears crisis and achieving normal levels of new lending activity.

“This week’s export figures were disappointing and highlight the weakness in particular in the European economy. There is now a clear need for far greater coordinated action to stimulate economic activity at European level. As an exporting country this would be of significant benefit to Ireland.”