Seanad Éireann debate -
Thursday, 2 Jun 2011

Vol. 208 No. 3

EU-IMF Programme

Senator Thomas Byrne

I thank the Minister for Finance, Deputy Michael Noonan, for attending the Chamber to address this Adjournment matter at such short notice. He has an important job to do, one in which, by and large, I and my party will be supporting and encouraging him. This matter, however, I believe is sufficiently serious for him to address.

Last week a Minister, as part of a pre-arranged interview concerning the return of Ireland to the bond markets, an area not in his brief, stated Ireland would not return to the bond markets. Since then Government officials have had to make all sorts of briefings, creating confusion.

A similar event occurred several weeks before when another Minister misspoke official Government policy. On this most important and most sensitive issue, the Government is speaking not with one voice or a sense of common purpose but as a collection of individuals trying to get themselves in the newspapers.

The leader of Fianna Fáil mentioned in the other House that this slip-up was referred to 2,200 times in the international media. The Minister in question has now re-entered the fray, claiming his comments were hyped up. Yesterday's edition of The Irish Times, however, sums up this so-called hyped up mood. It stated:

. . . careless talk by Government Ministers on fiscal policy at a time when the State's very solvency is at stake can prove extremely damaging. It creates doubt and uncertainty in financial markets among those that most matter, the bond investors from whom the State hopes to borrow again next year.

It went on to recommend that the Minister, Deputy Leo Varadkar, should mind his own Department's business. I would recommend that too.

Deputy Varadkar is a very intelligent Minister and I will be lobbying him on important issues such as road safety, the Slane bypass and integrated ticketing for commuters. We will have to borrow from bond investors to fund many of these items. The impact of this talk and confusion on consumer and business interest rates from our banks must not be underestimated either, a point needed to be understood more by the wider populace.

The Government should speak with one voice on the important issue of our solvency, a provision which should apply to Government backbenchers too. Throwaway comments in a Chamber, or even a leak from a parliamentary party meeting, can often end up in the world press, as I know from bitter experience.

There is good news, however. Yesterday's edition of the San Francisco Chronicle stated, “Ireland should be able to access bond markets next year, according to Frank Gill, senior director of European sovereign ratings at Standard & Poor’s.” The world is watching. I hope these comments should give encouragement to the Government to stick to the approach laid down and agreed by the former Government. It should speak with one voice, with a sense of common purpose and remember that life in government is not just about profile interviews but sometimes staying quiet. From this side, we will support the Government’s agreed policy on our solvency and do nothing to undermine it.

Minister for Finance (Deputy Michael Noonan)

I thank Senator Thomas Byrne for raising this issue and giving me the opportunity to address the remarks made. I also thank him for his support and that of his party for the general thrust of Government policy on these matters.

When commenting on financial market issues, it is important we are aware that what we say can be misunderstood for a variety of reasons. For this reason finance Ministers refrain from comment on such matters. However, the Government position remains as was, namely, we will repay our debts in line with their terms and conditions. The Government is not seeking any rescheduling.

I reiterate that the Government is committed to the programme targets. This commitment covers all the conditions covering fiscal consolidation, financial sector reform, structural reform and structural fiscal reform. Meeting these conditions on time and on target is the best way to ensure that we emerge successfully from this programme. This will mean that we can return safely to the financial markets for funding in as timely a manner as possible. This is one of the principal objectives of the programme.

This Government's commitment to the programme does not stop us from seeking and agreeing changes to aspects of it. Indeed, the Government has already renegotiated changes in the key conditions of the programme that it wished to change. The outcome of the recent review was that programme implementation is on target, in terms of the fiscal targets and of delivering the conditions with end-March 2011 deadlines. We have made a strong start and have received a clean bill of health from the troika, namely, the European Union, European Central Bank and IMF, the teams which undertook the review.

The subject of this motion must be considered in this context, namely, a strong commitment to the programme objectives and a strong track record on implementation. In relation to the statements made, I believe these were taken out of context. In the case of the Minister, Deputy Varadkar, I understand his comments were made in relation to the likely funding of public private partnerships in the transport infrastructure sector and were not specifically about the EU-IMF programme of financial support in general. On the comments made by the Minister for Public Expenditure and Reform, I understand that this refers to a story carried by Reuters in the middle of last month. This arose from an answer to a hypothetical question. I want to emphasise that answers to hypothetical questions are just that. Government policy is, as I have already stated, that we will repay our debts in line with their terms and conditions. The Government is not seeking any rescheduling.

Ireland's programme is on track and we are doing what is necessary to restore our ability to fund ourselves. It is the stated intention of the National Treasury Management Agency, NTMA, to return to sovereign debt markets as soon as market conditions permit. The steps necessary to enable such a return include resolution of the banking sector issues and continued progress in the reduction of the budget deficit in line with the targets agreed in the EU-IMF programme of financial support together with implementation of policies that will see us return to sustainable economic growth. A key development in that regard has been the publication of the results of the bank stress tests on 30 March 2011 and the associated recapitalisation exercises which have been well received by investors and rating agencies alike.

The NTMA is in constant contact with market participants and will advise me when it feels that the time is right to re-enter the markets. In the opinion of Mr. John Corrigan, head of the NTMA, we may be able to do so in the third quarter of next year. While circumstances change, that is his tentative date. Based on conservative projections of our funding needs and taking account of funding possibilities, there is no urgency about a return to the markets. Indeed, the purpose of a programme such as the EU-IMF programme for Ireland is to provide the space necessary for economic and fiscal adjustment to take place. Based on current projections and assuming no market access, the State has access to sufficient funds for its needs into the second half of 2013.

The continued adherence to Government polices aimed at fostering growth and to the programme conditions, will be an important part in achieving this outcome.