Talks held with Troika on bailout programme exit assistance

Thursday 25 October 2012 18.43
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Ministers Howlin and Noonan says country has drawn down 80% of programme funding
Ministers Howlin and Noonan says country has drawn down 80% of programme funding
Troika officials have carried out their eighth review of Ireland's finances
Troika officials have carried out their eighth review of Ireland's finances
Michael Noonan says Ireland 'not looking for a second bailout'
Michael Noonan says Ireland 'not looking for a second bailout'
Brendan Howlin says Troika happy with Personal Insolvency Bill figures
Brendan Howlin says Troika happy with Personal Insolvency Bill figures

The Government has held discussions with the Troika about what assistance would be available to Ireland as it exits the EU-IMF loan programme.

Finance Minister Michael Noonan made the comments as the Troika concluded its latest mission to Ireland.

Mr Noonan and Public Expenditure & Reform Minister Brendan Howlin said the country has successfully concluded the eighth review mission of the programme.

They said Ireland has met all of its programme commitments and its continued strong implementation has been recognised by the Troika.

They said that to date over 160 commitments have been fulfilled on time and the country has withdrawn about 80% of the programme funding.

But they warned that significant challenges remain and getting people back to work remains the key priority of the Government.

Mr Noonan told a press briefing that the EU and IMF will publish a paper before Christmas on options for leaving the bailout programme.

He said he had a short discussion with the Troika about what assistance would be available for Ireland as it exits the EU-IMF programme. ''Our hope would be that we not have to use any of these,'' he stated.

One piece of assistance would be "a statement from Mr Draghi" that Ireland could avail of the ECB's bond buying programme, he said.

Work is also continuing on discussions on the restructuring of the Anglo Irish Bank promissory note. "We have a reasonably good interchange with the European Central Bank,'' the Finance Minister stated.

He said it would be "convenient" if there was agreement before the Budget, but he added that the repayment of the next instalment under the promissory note is not due until next March.

Minister Noonan also told the press conference that Ireland is ''not looking for a second bailout".

He said ''there is no doubt a deal on the debt would make Ireland's position more sustainable". He said if there was a deal on the debt, Ireland would be able to raise money on the bond markets at a lower price.

On the Personal Insolvency Bill, Michael Noonan said the cap on people using the insolvency legislation of debts of €3m would remain. He said the ECB thought the figure was too high, while the Department of Justice said it was too low.

But Minister Brendan Howlin commented that the Troika was happy with the figure.

He said there was a lot of comment in the US media about the legislation and some suggestions that the US should adopt a similar strategy.

Meanwhile, Mr Noonan and Mr Howlin are due to meet German Finance Minister Wolfgang Schauble in Farmleigh on Monday.

Mr Noonan told today's press conference that the German Minister had been very helpful to Ireland. He said the lead item in his discussions with Mr Schauble would be the banking union.

Among the key actions completed in the latest review were the publication of legislation to establish a statutory credit risk register as well as the publication of the Personal Insolvency Bill. The publication of the General Scheme of the Credit Union Bill and Fiscal Responsibility Bill was also achieved, while the industrial relations act 2012 came into force.

The Finance Minister said that the real test of Ireland's programme will be emerging from it, getting fully back into the markets and building a sustainable and long last economic recovery.

''Since the last view of the programme in July, the NTMA have returned to the financial markets and over €5 billion of private funding has been raised. There have also been a number of very important jobs announcements from both indigenous and foreign companies highlighting the improvements in Ireland's competitiveness and the flexibility and skill of the Irish labour force,'' Minister Noonan stated.

''However, many challenges remain including the heavy burden of debt associated with the recapitalisation of the banking sector and work is ongoing with the Troika to reduce this burden in line with the June agreement,'' he added.

Sale of state assets programme progressing - Howlin

The Minister for Public Expenditure and Reform, Brendan Howlin, has said the Government is working towards exiting the EU-IMF programme in an orderly fashion.

Minister Howlin told the News at One today that discussions are underway on how that might happen. He said the European Commission has volunteered to prepare "options of support" so that Ireland can be the first country to exit a programme of this kind.

Minister Howlin said it would be a huge advantage to have a deal on our bank debt prior to exiting the EU-IMF programme. However he added, it is not a pre-condition.

On the sale of state assets, Minister Howlin said the programme is "progressing a pace". The Troika had told the Government to sell off state assets to raise cash. He said huge work has been done in bringing to market the assets of Bord Gáis. He said work had also been done in relation to Coillte.

Troika urges 'growth friendly' Budget

A statement from the Troika on its latest review mission to Ireland has said that policy implementation to the bailout programme remains ''steadfast'' despite the challenging external environment.

The Troika said the country is expected to meet its fiscal targets for this year, despite expenditure overruns in some areas.

The statement said that while the banks remain well capitalised and their downsizing plans are progressing well, further efforts are needed to address their profitability and growing level of arrears.

But the Troika highlighted the unacceptably high level of unemployment, especially among the youth and said that job creation and growth remains a key priority. It also said the Government is ''alert'' to the level of overspending in the health sector.

The EU and IMF has urged the Government to adopt Budget measures that are ''durable'' and ''as growth friendly as possible to minimise the burden of adjustment on the most vulnerable''.

''Intensified efforts'' are required to deal decisively with mortgage arrears and further reduce bank operating costs, the Troika urged. It noted the Government's ''ambitious'' reform of the personal insolvency framework and that for this essential reform to succeed, a careful balance should be struck that addresses borrowers' financial distress and protects the family home, while also reinforcing debt service discipline.

An orderly phasing out of the ''costly'' Eligible Liability Guarantee Scheme would improve the banks' profits and support lending capacity, it added.

''The key objectives of Ireland's EU-IMF supported programme are to address financial sector weaknesses and put Ireland's economy on the path of sustainable growth, sound finances and job creation, while protecting the poor and most vulnerable,'' today's statement said.

The Troika said that conclusion of the eighth review would see the IMF releasing €0.9 billion in funds for Ireland, while the EFSM/EFSF release another €0.8 billion. EU member states are expected to donate another €0.5 billion through bilateral loans.

The next review mission is due in January.

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