Proposed Legislation

Dáil Éireann Debate, Wednesday - 14 September 2011

Wednesday, 14 September 2011

Questions (126)

Finian McGrath

Question:

125 Deputy Finian McGrath asked the Minister for Finance if new legislation was put in place or will be required in order to ratify and implement the agreement on the European financial stability facility. [23907/11]

Written answers

Minister for Finance (Deputy Michael Noonan)

With the approval of the Government and subject to confirmation by the Oireachtas, I signed the Amendment to the EFSF Framework Agreement on behalf of Ireland on 8th September 2011. The Amendment agreement provides for the implementation of the measures announced by the Heads of State or Government on 21 July last. These include increasing the flexibility of the EFSF in the euro area, to allow it to act on a precautionary basis, to finance the recapitalization of banks through loans to Governments and to intervene in primary and secondary markets on the basis of ECB analysis. The Amendment agreement will facilitate the reduction in the interest rate charged on loans to Ireland but the actual reduction will be given effect in the EFSF Loan Agreement with Ireland. It should also be noted that the Amendment I signed on 8 September 2011 incorporates an earlier Amendment agreement of 30 June 2011 which had not yet been ratified by most euro area Member States, including Ireland. The primary purpose of the earlier amendment was to increase the effective lending capacity of the EFSF to €440 billion. This is being accomplished by an increase in the level of over-guarantee to 165% for each of the guarantor Member States. Although Ireland's guarantee ceiling increases, it is notional in our case because we have stepped out and this is noted in the Amendment agreement.

Legislation to ratify the Amendment to the EFSF Framework Agreement is being prepared for the consideration of the Oireachtas. The Bill will also provide for the amendment of the Euro Area Loan Facility Act 2010 to provide for the amendment of the (Greek) Loan Facility Agreement dated 14 June 2011. It is proposed that the Bill be published later this week and brought before the Dáil for debate next week.