|Ajai Chopra, deputy head, IMF's European Department and head of the Troika -- - - EU Commission, the ECB and the IMF - - with responsibility for the Irish bailout.
The Government said today that Ireland has
successfully concluded the seventh review of the Programme of Assistance (the bailout) with
the so-called Troika - - EU Commission, the ECB and the IMF. In line with each
of the previous six quarterly reviews, Ireland has continued to achieve all of
the targets set under the programme.
The Troika said in
a statement today: 'Despite the weakening external environment and higher
unemployment, strong collection efforts have brought in revenues ahead of
profile. However, Ireland's budget deficit remains the largest in the euro area,
and it is essential that the authorities maintain prudent control of
expenditure, including in health care. The result of the end-May referendum
enables ratification of the Treaty on Stability, Coordination and Governance,
and forthcoming legislation to implement the Treaty will strengthen Ireland’s
Ireland’s unemployment remains unacceptably high
and generating growth and jobs on a sustainable basis remains a critical
priority. Accordingly, the authorities are considering plans to utilize the
enhanced European Investment Bank resources in a range of sectors including
education, transport and health care. The introduction of pilots to more
actively engage with the unemployed under the Pathways to Work program
is encouraging. Strengthening the provision of activation services, especially
for the long-term unemployed, is critical.'
Michael Noonan, minister for finance, said the
Budget would be held in the first week of December and a little over €2bn of the
€3.5bn savings target would come from expenditure cuts, with a further €1bn plus
coming from tax increases and other revenues.
He said the Budget would be helped by a tax
carryover from 2012.
Noonan said reducing the burden of bank debt was
essential if the economy was to recover and repaying the interest on the loans
would result in a drag on growth rates.
He said he was confident that the 2015 deficit target of 3% of GDP will be achieved - - but he would say that, even though current growth forecasts for 2014 and 2015 are too high.
The following are agreed steps to be taken in the
coming three months:
- An indicative timetable for asset sales is
in place. The Government will provide progress reports in the next two
quarters on the steps being taken to prepare for asset sales to commence in
- To help tackle the high and persistent rate
of long-term unemployment the Department of Social Protection will continue
to build on progress so far in enhancing our labour market activation
services. The Department will take steps to
- increase the number of unemployed referred
to training courses and employment supports in order to reduce the risk of
- o improve the ratio of vacancies
filled off the live register, and
- o ensure engagement with employment
services as a pre-condition for receipt of jobseeker payments.
- Measures to address the emerging spending
overruns in the health sector are to be specified before the end of
- The Industrial Relations (Amendment) Bill
2011 will be further advanced through the legislative process by
- A report on the impact of labour market
reforms to sectoral wage-setting mechanisms undertaken under the programme
is to be provided by end-June 2013.
- The Department of the Environment, Community
and Local Government and the Department of Social Protection will report on
housing assistance reform, in particular on the introduction of the new
Housing Assistance Payment. The Department of the Environment, Community and
Local Government will also report in September 2012 on progress towards the
transfer of water services provision from local authorities to Irish Water
and the roll-out of a domestic water metering programme.
Financial Sector Reform
- The Troika noted the progress made in
relation to the reduction of ELG exposure and that the State intends to
continue to work with the banks to reduce this contingent liability. This is
also an important issue for the international markets’ investors and will
help the State back to the bond market.
- The banks’ deleveraging is in line with or
slightly exceeding forecasts and will be assessed against the existing
nominal targets for disposal and run-off of non-core assets in line with the
2011 Financial Measures Programme. Fire sales and excessive deleveraging of
core portfolios will be avoided so as not to impair the flow of credit to
- The loan to deposit ratio (LDR) will be
replaced with a Net Stable Funding Requirement benchmark. This will help
alleviate some of the pricing pressures on the deposit market, and allow the
banks to adopt a broader perspective on their funding base.
- PTSB’s restructuring plan continues to be
developed and progress will be made over the coming quarter.
- Draft guidance for the creation and
subsequent holding of liquidity buffers will be established once the Capital
Requirements Directive is finalized.
- Specific features of the methodology for
capital assessment will be agreed by the end of March 2013.
The ongoing process of enhancing fiscal reporting
has been formalized in the programme.