|Taoiseach Enda Kenny (r) apparently giving some grim news to Jean-Claude Juncker, prime minister of Luxembourg and head of the Eurogroup of Eurozone finance ministers, Brussels, March 11/12, 2011.|
UPDATE Monday, March 14: The Minister for Finance Michael Noonan will meet European Central
Bank (ECB) president, Jean-Claude Trichet, and EU economics commissioner Olli
Rehn in Brussels today, ahead of his first meeting of the Eurogroup of Eurozone
Noonan is reported to be seeking the establishment of a working group to examine
how the additional funding for Ireland’s stricken banks can be agreed.
There are fears that current bank stress tests will reveal a requirement for
more funding than Ireland can reasonably afford.
In January, the Central Bank
appointed 3 expert external advisors to assist it to execute the Prudential
Capital Assessment Review (PCAR) and Prudential Liquidity Assessment Review (PLAR):
The giant US fund manager BlackRock Solutions was assigned to perform reviews of
asset and data quality of those banks participating in the PCAR and PLAR.
US consultants, The Boston Consulting Group, were to provide project management
resources for the Central Bank’s Financial Measures Implementation Project. It
is to also contribute advice for the PCAR and PLAR.
Barclays Capital was assigned to provide advice on banking sector structure
issues. It is also contributing advice on matters arising from the PCAR and
Sunday, March 13: Taoiseach Enda Kenny said on Saturday at the conclusion of a special summit
of the 17 leaders of the Eurozone that the Minister for Finance Michael Noonan
will meet Jean-Claude Trichet, president of the European Central Bank, on Monday
to discuss the Irish banking crisis and in particular stress tests of the banks
and funding issues.
The Taoiseach met Trichet at the summit in Brussels and the ECB president has
agreed to also meet the Taoiseach prior to the crucial summit on Eurozone
reform, which will be held on March 24 and 25th.
At the weekend summit, Eurozone leaders agreed to cut the interest rate on
Ireland's EU-IMF loans by 1% from the current level of almost 6% but Germany and
France insisted that Ireland would have to reciprocate with a change in its
corporate tax system.
The summit agreed a Pact of the Euro on closer governance and coordination in
the common currency area.
In return for Greece agreeing to a €50bn privatization and
public property sale programme, the council cut the interest rate on its loans
by 1% and the maturity for all the programme loans to Greece will be increased
to 7.5 years, in line with the IMF.
The leaders also agreed to allow the existing €440bn European Financial
Stability Facility (EFSF) rescue fund to buy
sovereign bonds of debt-embattled governments when they are initially auctioned, a
move that that could enable countries with high borrowing costs to raise cash at
much lower yields.
The Taoiseach said that he had a
"good vigorous and vibrant discussion" with French president Nicolas Sarkozy
on the corporate tax regime.
"We weren't satisfied with
what Ireland agreed to today, so the question of lowering interest rates has
only been addressed for Greece," said German
Chancellor Angela Merkel.
“Obviously, this is a very
touchy subject for our Irish friends,” Nicolas Sarkozy,
the French president said. “It’s hard to have other
countries help or bail out Ireland when Ireland has the lowest corporate tax
rates in Europe.”
Sarkozy added that Kenny would be
given until the summit in a fortnight to agree the deal.
"The question that was
being asked of me was to make references to our corporate tax rate. I made it
perfectly clear on many occasions that this was not something that I would
contemplate and didn't this evening," the Taoiseach
He rejected both an increase in the tax rate or the introduction of a common
consolidated corporate tax base (CCCTB), which he termed as a "back door"
route to tax harmonisation.
"In respect of both the CCCTB and the corporation tax rate, that for me this
was an issue that I couldn't contemplate. But I did say that in respect of other
elements of the pact I would of course engage constructively with our colleagues
around the table," he said.
Ernst and Young
Report on the CCCTB (pdf) commissioned by the
Department of Finance
CONCLUSIONS OF THE HEADS OF STATE OR GOVERNMENT OF THE EURO AREA OF 11 MARCH
“Ireland was disappointed at the end. It basically got nothing,”
The Wall Street Journal quoted an official.
“I think the reason for this is that their government is still very new and
they have a way to go in order to prove that they are on the right track,”
the official said. “They were also very demanding which I think angered
everyone in the room.”
In this particular context, that is surely good news in terms of the open round
|Taoiseach Enda Kenny (l), Jean-Claude Juncker, prime minister of Luxembourg and Nicolas Sarkozy, French president, Brussels, March 11/12, 2011.