Dáil Éireann Debate, Wednesday - 18 April 2012
33 Deputy Pádraig Mac Lochlainn asked the Minister for Finance his views on the growing fiscal and funding crisis in the Greek, Portuguese and Spanish economies; the impact these crises will have on the eurozone as a whole and the economy here in particular and the contingency plans he has in place in the event that any of these events trigger an increase in Irish Government bond interest rates. [19308/12]
View answerRegarding the situation in Greece and Portugal, their public funding needs are being met through loans from their EU partners and the IMF. As part of this external funding, both countries have agreed to a consolidation strategy to correct their excessive deficits within a pre-determined timeframe. I am conscious of the decline in market sentiment towards Spain in recent weeks. However, I am encouraged by the fact that the new Spanish government is committed to correcting its excessive deficit by next year, and my Eurogroup colleagues and I have noted the recent fiscal consolidation measures that are being implemented in order to achieve this. In addition, it is worth pointing out the reforms — notably in the labour market — that are being introduced; so the authorities are being pro-active in addressing the situation.
In terms of the euro area as a whole, my view is that all Member States must stay on the agreed path. We must continue to implement the ‘five-point' strategy agreed last year — involving inter alia addressing difficulties in the European banking system and enhancing governance — so that we continue to build on the momentum that has become evident in the first quarter of this year.
Finally, in relation to Irish Government bonds, longer term yields remain (as per mid-April) at just under 7 per cent, which is a substantial decline from the peak of around 14 per cent in July last year. The improvement in market sentiment towards Ireland reflects the substantial progress that is being made. Specifically in terms of our Programme, we have met all our targets and we have also seen the economy returning to growth and an increase in tax revenues. Importantly, yields have not varied significantly in recent weeks, so while it is important not to be complacent, it is fair to say that confidence in Ireland is being maintained.
