Irish PM reshuffles cabinet, shifts economic focus

DUBLIN (Reuters) - Irish Finance Minister Brian Lenihan will stay in his job after a cabinet reshuffle aimed at shifting the focus to generating growth following painful fiscal measures, Prime Minister Brian Cowen said on Tuesday.

Minister for Finance, Brian Lenihan, arrives at government buildings in Dublin, December 9, 2009. REUTERS/Cathal McNaughton

Lenihan, the main architect of reforms undertaken to contain Ireland’s debt problems, said in January he would only carry out essential duties while undergoing therapy for cancer in the first half of this year.

With public sector wage cuts introduced by Lenihan in December, Ireland has led the way among peripheral euro zone countries, although unions have threatened to escalate their low-key protest actions against the austerity measures.

“As our focus shifts to generating economic growth again, so must government adapt to the new challenges and sharpen its focus on new tasks,” Cowen told parliament. “This requires changes in how government works.”

The government has said fiscal tightening would have to continue for years to get the budget deficit down to the European Union limit of 3 percent of GDP by 2014 from more than 11 percent last year.

“We have major challenges and decisions to make, but we are on the right track,” Cowen said.

He had to reorganise his cabinet after Willie O’Dea resigned last month as defence minister following allegations of perjury, another minister quit for health reasons and coalition partners the Greens also lost some of their senior officials.

Cowen did not mention any changes at the helm of the finance ministry, although he assigned Dara Calleary, minister for labour affairs, additional duties in the prime minister’s department and said he would also report to Lenihan as a junior minister.

“The main thing is that Brian Lenihan is still in finance,” said Alan McQuaid, chief economist at Bloxham Stockbrokers. “(Calleary’s appointment) probably does ease the burden and he seems to be one of the brighter things,” McQuaid added.

Cowen also reconfigured the ministry responsible for trade and enterprise, moving Deputy Prime Minister Mary Coughlan, widely criticised in the press for her frequent gaffes, from that portfolio to education and science.

Reporting by Andras Gergely and Barbara Lewis, editing by Paul Taylor