New govt to review EU/IMF progressTuesday 08 March 2011 16.34
The new government intends to review how it meets the terms of the European Union/International Monetary Fund's four-year plan for Ireland half-way through the deal.
One of the Fine Gael TDs who negotiated the next programme for Government has described the comments by Olli Rehn today as very helpful.
Speaking on RTÉ's Six One, Alan Shatter said clearly one of the first issues facing the incoming government is to renegotiate the interest rate payable on the EU/IMF loans.
He said Ireland and Europe both have an interest in the interest rate being sustainable and there is a growing realisation that it is not sustainable.
He added that Olli Rehn's comments today opened the door to further discussions due to take place over the coming days.
Brendan Howlin, who was a member of the Labour team which negotiated the new Programme for Government with Fine Gael, said they would follow the plan for two years, but would then re-assess the country's economic situation.
Meanwhile, the commitment in the Programme for Government not to transfer further assets to the National Asset Management Agency will affect up to €21bn of bank loans, RTÉ News has learned.
The transfer of all land and development loans in Bank of Ireland and AIB was a condition of the EU/IMF deal.
This represents €12-16bn of assets and requires new legislation. A further €5bn is being transferred to NAMA from other developers.
Irish Congress of Trade Unions General Secretary David Begg said there may be a danger that the measures which are frontloaded in the first two years of the programme could result in a deflationary shock to the economy and a negative affect on growth.
Elsewhere, the leaders of Fine Gael and Labour were expected to hold their first official meeting today since agreeing to form a coalition government.
Fine Gael leader Enda Kenny and Labour Party leader Eamon Gilmore have said they will 'get down to work' after members of both their parties backed the Programme for Government yesterday.
Under the deal, the Department of Finance will be split with a new minister being responsible for public expenditure and public sector reform.
The agreed document also includes a target to reduce the deficit to 3% of GDP by 2015, the introduction of water charges and a review of the Universal Social Charge.
The two party leaders have said that urgent issues that need to be dealt with will be addressed immediately by their government.
An announcement on the make-up of the Cabinet is not expected until just before the new Dáil meets on Wednesday.
On RTÉ's Morning Ireland, Labour Party Deputy Leader and Finance Spokeswoman Joan Burton described the new Programme for Government as very ambitious.
She said that it would be mostly financed through 'intelligent' use of the National Pension Reserve Fund, and a heavy reliance on economic growth.
A spokeswoman for the European Commission said it welcomed the incoming government’s ‘strong commitment to the key economic policy goals in particular as it concerns the fiscal consolidation path’.
Opposition parties have reacted to the new Programme for Government saying it was a continuation of the previous government's four-year economic plan - a charge rejected by Fine Gael and Labour.
Fianna Fáil TD for Limerick West Niall Collins said the programme is striking in terms of the number of decisions that it puts off for later and the lack of detail on how any of the many promises it includes will be funded.
Sinn Féin President Gerry Adams said the programme would be bad for low and middle income families and an austerity approach would mean further depressing the economy.
Joe Higgins of the United Left Alliance described the plan as reactionary, saying that it included attacks on living standards with new water and home taxes.
The IFA has welcomed the commitments in the Programme for Government to promote commercial farming and to defending the CAP payments.
However, they say the Government must deliver on the strong growth potential in agriculture and the agri-food sector.
Employers' group IBEC gave a mixed response to the new Programme for Government.
They welcomed the firm commitment to support job creation and tackle the budget deficit, but said any move to reverse the minimum wage reduction or introduce collective bargaining rights was at odds with the economic needs of the country.