The 26-County Taoiseach has railed against “negativity” as Ireland’s sovereign debt was judged to be at an increased risk of default by international credit agency Moody’s.
The ratings downgrade will raise the cost of borrowing for the 26 County state and moves the state’s bonds closer to ‘junk’ status.
However, Moody’s said that its outlook was now ‘neutral’, indicating that it is not planning a similar move in the near future, as a result of the state’s effort to adjust it budget.
Cowen insisted the ratings downgrade had positive aspects.
“We have had enough of this pervasive negativity all the time trying to take a bad interpretation of a report which is in fact supportive of what the Government is doing,” said Cowen.
He was speaking after it emerged that the assets being taken over by the NAMA state bank from developers and bankers are worth significantly less than had been claimed.
It has also emerged in the past week that the Dublin government based its 400 billion euro bank guarantee scheme on the false belief that 500 billion euro in assets were held by the banks,
Sinn Fein Spokesperson on Finance Arthur Morgan said that Government policy concerning the banks had clearly failed.
Deputy Morgan also said that the effect of the Moody’s downgrade would be crippling for the whole economy as the higher cost of borrowing would lead to a further restriction in credit for small businesses and households.
“The cost of borrowing will increase for the Irish Government as a result of their unfettered allegiance to an ailing banking system and especially the zombie Anglo Irish bank.
“Once more, the inadequacy of Government policy concerning the banks has been revealed.
“The consequences for the wider Irish economy of this downgrade will be crippling - the increase in the cost of borrowing for the Government will manifest across the whole economy. Access to credit will become further restricted to SMEs and households as the ripple effect takes hold.
“The Government’s home grown crisis, which has produced weak banking and property sectors, is once more curbing economic growth.
“The ratings agency attributed the Government’s gradual but significant loss of financial strength for the downgrade.
“Propping up zombie banks comes at a high cost to the ordinary people of this State.”
Morgan also criticised “the culture bred by government” where financial markets became the judge of how regulation was carried out.
“Incompetent people were placed into important positions and they were rewarded for this incompetence by an incompetent Government.
This light-touch regulation is now a burden shackled around each and every person for generations to come.
“The people of this State are paying a heavy price for the failure to regulate adequately. The social costs of the failure to regulate properly are severe - hundreds of thousands of people will not only be in debt but many are at risk of having their homes repossessed.
“However a financial regulator who played a heavy part in Ireland’s banking crisis was able to receive a 630,000 euro severance package on his retirement.
.Rather than being sacked, blacklisted and punished for failing to see beyond the word of the banks, the former regulator was able to retire with a hefty severance package.
“The white collar crime and corruption that engulfed the Irish banking sector needs to be treated as seriously as any other form of crime, and needs to be prosecuted quickly and effectively.
“There needs to be a serious inquiry into the role of the former Financial Regulator who was disposed to say that the Irish financial system was robust, adequately capitalised and in a position to withstand the turbulence sweeping through the markets just 72 hours before the Government had to move in to save it.”