skip to main content

Troika to assess Budget proposals

Noonan will go above €3.6 billion in Budget if needed
Noonan will go above €3.6 billion in Budget if needed

The European Commission, European Central Bank and International Monetary Fund has said the Irish programme is succeeding, though there are challenges ahead.

In a statement after the troika's latest review, they said Budget measures were being determined by the Government and would be assessed by the three institutions in the coming weeks.

Istvan Szekely of the European Commission later told reporters at a press conference there was a "substantive discussion" on the possible measures in the Budget, with all possible options discussed.

Asked about whether the Government should go further than its targets in the forthcoming Budget, Ajai Chopra of the IMF said the troika had endorsed the budget deficit target of 8.6% of GDP for next year, adding that the economy needed growth.

Earlier, Finance Minister Michael Noonan said the latest review found that Ireland has met all its targets under its plan.

Minister Noonan said the troika were interested in plans for the Budget, but said they would have "no difficulty" if one measure under the programme were substituted for another of equal value.

He reiterated that the Government's target for the Budget was for a deficit of 8.6% of gross domestic product. The Finance Minister said that if this could be reached with €3.6 billion of measures, it would be done, but he said the Government would go above that figure if necessary to reach the 8.6% target.

Minister Noonan said tax returns for October and November would have to be examined because they were big months for tax.

Public Expenditure & Reform Minister Brendan Howlin said the Government had made it clear it wanted to use the proceeds of any sales of State assets to stimulate growth in the economy. He said the Government and the troika would continue to engage on this issue between now and the next review.

He said the troika had wanted any sale proceeds to be used to reduce debt, and had not formally moved from this position. But Minister Howlin said the troika were willing to engage with the Government on its ideas.

Minister Noonan also said the Government's medium-term budgetary statement for the three years between 2012 and 2015 would be published at the end of the first week in November.

State sell-offs "not a game-changer"

On the sale of State assets, Mr Szekely said it was difficult for financial targets to be set because of market conditions. He said privatisation was important for structural economic reform as well as for revenue, but there was no need to rush into it as it was not a "game-changer" for the Irish economy.

He said the troika's focus was on sectors where there was no clear justification for Government ownership.

Mr Szekely also said he would look at any changes decided at EU level to deal with the wider euro zone debt crisis to see if they could be used to help Ireland implement its programme.

Mr Chopra said there should be more transparency in banks' balance sheets, calling for an improvement how banks recognise losses and set money aside to deal with these.

On the mortgage arrears issue, Mr Chopra said the Government was on "the right path" by emphasising a case-by-case approach that kept the incentive to pay back debt.

He warned that there were risks to the Irish economic performance from developments in the wider euro area, and also from domestic problems such as high levels of household debt.

Klaus Masuch of the ECB said the bank's opposition to imposing losses on senior bondholders had not changed. He said he was convinced Ireland's debt was sustainable and could be paid back, as it was one of the "most productive" countries in the EU.