By David Barwick

BRUSSELS (MNI) – There is reason to view the Irish situation with
greater optimism after Dublin announced new plans for bailing out
troubled banks and reaffirmed its commitment to cutting the public
deficit down to size, Austrian Finance Minister Josef Proell told Market
News International on Thursday.

Proell, speaking on the margins of the Informal Ecofin here, voiced
confidence in Spanish GDP data after an unsubstantiated anonymous report
cast doubt on it. He said Spain and others are on a path that will lead
them out of the crisis.

Proell also said Japanese forex interventions would not hurt the
Eurozone economy.

Irish finance minister Brian Lenihan “gave us an overview about the
situation in Ireland and we made clear that we expect in the next weeks
from the government in Ireland concrete forecasts and figures on what it
is to do in the next four to five years to reduce the deficit below 3%
and come back on track, and he promised it,” said Proell. “And so we are
waiting and then we will discuss whether it is enough or not enough.”

“I’m more optimistic after this contact today that they can manage
it with their capacity in Ireland, with their measures,” he added. “I’m
really more optimistic than before.”

As for Spanish GDP data, “I have no reason at this stage to think
that the figures are not realistic,” Proell affirmed. “So I think Spain
and the others are on the right [path to] consolidation and I think they
can manage the crisis.”

An anonymous report on the Financial Times’ Alphaville blog site on
Thursday asserted that Spanish national accounts data for 2007-2009 had
significantly understated the decline in economic growth. The report
truncated an early morning rally in Spanish government bonds.

Although neither Japanese nor other countries’ currency policies
was discussed today, Proell urged that “we should keep an eye on”
growing signs of a “currency war.”

“But I think at the end of the day the policy of Japan…will not
damage or endanger the Eurozone and the economy in Europe,” he said.

Proell said he is not concerned about the euro’s current level,
after it rose above $1.36. Asked whether the common currency is fairly
valued, he replied, “I think the euro and the Eurozone showed in the
last months that we are able to fight the crisis and send a clear
message to the markets and so there is a stable situation from my point
of view.”

He continued: “I’m really more optimistic for the economy of the
Eurozone and Europe than at the beginning of this year. There is a much
better situation now. But we have to be careful because I’m not sure
that this is a sustainable evolution” unless countries stick
conscientiously to the path of fiscal responsibility.

As for a double-dip recession in the Eurozone, “I do not see this
scenario,” he said. And although the U.S. economy is sending “different
signals,” he conceded, “a double-dip situation I also do not expect in
the United States.”

–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com

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