Voormalig IMF-medewerker: bezuinigingen remmen groei Ierland (en)

BRUSSELS - A former IMF official has said Ireland needs to move away from austerity measures if the country's economy is to grow.

Ashoka Mody, who was one of the architects of Ireland's IMF bailout, told broadcaster RTE that there was "not one historical incidence" where austerity policies have led a country to get out from under a heavy debt burden.

“We have to ask ourselves why Ireland is not growing . . . It’s hard for me to believe that austerity is not contributing to this,” he said.

Mody called constant budget-cutting a "potentially self-defeating policy" because it had not resulted in growth.

His comments come as the Irish government contemplates cutting €3.1bn from this year's budget to be announced in autumn.

The cuts are demanded by the EU and IMF, Ireland's creditors, in return for the €85bn bailout the country received in 2010.

Since receiving the bailout - on the back of the collapse of a property bubble - Dublin has imposed a series of harsh budget cuts and tax hikes.

Unemployment is 13.7 percent and while last month figures showed that the country had gone back into recession.

Its commitment to budget-slashing has seen it praised by Berlin, who contributes the most to EU bailouts and is the greatest proponent of austerity.

But Mody questioned the "orthodoxy" in the Irish government that such polices are the "only way to establish market credibility."

On the planned the €3.1bn cut, Mody said the figure should be "considerably lowered."

He urged the government to "imagine and consider the possibility that for the next three years, as an experiment, there be no further fiscal consolidation."

Mody's comments come after a recent staff paper by the Washington-based institution admitting that it made mistakes in dealing with Greece, the first of the eurozone i countries to be bailed out.

Chief among the mistakes was underestimating the effects of the harsh bailout conditions imposed on Athens.

Greece has been hoping for further debt relief amid widespread public anger at the skyhigh unemployment and six years of recession.

Meanwhile, Portugal, another bailout country, is also struggling with its reform programme. Two senior ministers resigned amid doubts about the merits of austerity measures.

The conditions attached to the three-year €78 billion bailout agreement in 2011 required extensive cuts in social spending and tax hikes.