"Apply the plan," European Central Bank President Jean-Claude Trichet told Ireland on Thursday, in response to questions at a press conference in Frankfurt, on Opposition party proposals in the general election campaign to renegotiate the EU-IMF bailout that was agreed last November.
"Our message to the Irish government is 'Apply the plan,'" Trichet said. "The plan comprehends a number of measures concerning the economy and reshaping of the banking sector. Our message remains: 'Apply the plan.'"
The EU-IMF bailout terms were agreed on Nov 28, 2010: European Union and bilateral European lenders, including the UK, Denmark and Sweden, have pledged a total of €45.0bn and Ireland will contribute €17.5bn from the National Pensions Reserve Fund and advance borrowing by the National Treasury Management Agency. The International Monetary Fund's (IMF) contribution will be about €22.5bn, representing 2,320% of Ireland's quota, under the Extended Fund Facility (EFF).
Trichet said the ECB refrains from getting involved in election campaigns but he noted that the plan, accepted by Ireland, was approved by the IMF, the EU and the international community in general. "And implementation of the plan is absolutely essential, in my opinion and in the opinion of the ECB, for the credibility of the country," he said.
Fine Gael has said it would renegotiate terms of the bailout deal, including the level of interest rate charged and restructuring of senior bank debt, while the Labour Party said it would also seek an extension of the 4-year €15bn fiscal adjustment plan that was agreed with the European Commission last November.
Trichet was asked what would be the response if the incoming government were to reject parts of the bailout agreement, he said: "no comment."
On the emergency liquidity assistance (ELA) to Eurozone banks, Trichet said the ECB plans to end some banks' "addiction" to it and Irish banks account for about 25% of the outstanding advances. "We are looking at it as far as it has an impact on the functioning of our own monetary policy," he said.
The ECB president was asked about separate financial support being provided by the Central Bank of Ireland to Irish banks.
Trichet said central banks retain that power but the ECB is monitoring its use.
He stressed the need for countries to stick to reform plans.
"We have always a very strong message for all countries in Europe, without any exception, on the necessity to be absolutely credible on fiscal consolidation," he said. "We consider that fiscal consolidation is not contradictory with the consolidation of the recovery and with job creation, because consolidation brings about increased confidence, and confidence is the ingredient that is most missing in most of the countries."
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