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Dáil Éireann debate -
Thursday, 2 Dec 2021

Vol. 1015 No. 2

Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021 [Seanad]: Report and Final Stages

As there are no amendments on Report Stage we proceed to Fifth Stage.

Bill received for final consideration.
Question proposed: "That the Bill do now Pass."

I welcome that we will be dealing with the Final Stage of this legislation. As we discussed during the debate on the Finance Bill, the purpose of this Bill is to ratify agreements to the European Stability Mechanism, ESM, treaty and the Single Resolution Fund, SRF, intergovernmental agreement. This is required to fulfil the agreement that was reached by the Eurogroup on 30 November of last year. The Minister has described this as "a crucial stepping stone on our path to strengthen the Economic Monetary Union". I am aware he has a stake in this as president of the Eurogroup and as chairperson of the ESM board of governors.

We have raised some issues with the Bill in respect of the provisions relating to the SRF, which will now require funding through levies on all participating banks. I welcome this lesson has been learned. I only wish it had been learned earlier, requiring as it does bondholders to be burned and banks to fund their own recapitalisation, the latter being a requirement we in Sinn Féin have called for for some time.

The legislation approves reforms of the ESM, which was established in 2012 as a permanent fund to provide loans to financially distressed member states. We have the bitter lived experience of assistance that was provided subject to strict conditionality, with the then Government entering into a financial assistance programme with the European financial stability facility, EFSF, and the International Monetary Fund, IMF, in November 2010. The memorandum of understanding was etched into the lives of many Irish people and its impacts are still felt by many. It was a treatment that made the patient sicker.

The agreement we are debating alters the ESM's precautionary conditioned credit line, PCCL. These are reforms we in Sinn Féin cannot support because they are simply unworkable. Under the eligibility criteria of the PCCL provided in Annex III of this legislation, a member state can only access the credit line if it satisfies conditions that are now redundant and defunct. It makes no sense that we would pass legislation with redundant and defunct criteria tied to the fiscal rules. For example, a state applying for this credit line would have to have a debt-to-GDP ratio of less than 60%. At this time, 14 EU countries have ratios above this limit. If an applying state does not satisfy this criterion, it must have reduced the differential by one 20th in each of the previous two years. I gave the example of Italy on Committee Stage, but we could take many other countries. A country with a current stock of debt of 156% of GDP in each of the two years prior to its application would have to reduce its debt by approximately 5%. That is a significant contraction during a period of likely economic downturn. This means implementing austerity policies that are now roundly rejected by anyone with economic sense. How can we support such criteria?

The Minister has promised - I take him at his word in this regard - that there will be reforms of the fiscal rules in the coming period and that they will be reflected in the eligibility criteria of the credit line once they are implemented. I understand his point entirely, but with respect, that is not the legislation before us today. Rather, that is a promise of something in the future. Today, we are dealing with a Bill that contains criteria that are defunct. On these grounds, including the maintenance of the memorandum of understanding under the enhanced conditions credit line and the policy implications for member states, we in Sinn Féin cannot support this Bill.

Question put and declared carried.

A message shall be sent to the Seanad acquainting it accordingly.

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