Seán Fleming
Question:49. Deputy Sean Fleming asked the Minister for Finance the progress made to date on implementing the compact for growth agreed at EU level; and if he will make a statement on the matter. [43412/12]
View answerThursday, 15 November 2012
Questions (49)
Written answers
Heads of State or Government in the EU agreed on a compact for growth and jobs at the European Council on 28th and 29th June. This involves action by Member States and at EU level in order to boost growth, investment and employment. The compact rests on three pillars. First, sustainable growth depends on sound public finances. Second, sustainable growth requires a stable financial system that allows for financing of valuable economic activity. Finally, the dedication of EU funds for investment purposes complements the growth potential-enhancing structural reforms. In ensuring progress, measures continue to be taken at European and Member State levels.
Therefore, measures to be implemented at the national level include the full implementation of the country-specific recommendations from the European Semester as well as pursuing differentiated and growth-heeding fiscal consolidation. From an Irish point of view, I want to assure the Deputy that Ireland’s fiscal consolidation strategy is on track and fully appreciative of the need for growth. At the euro area level, important institutional innovations in support of Member States undertaking adjustment strategies have been implemented, notably the establishment of the European Stability Mechanism or the ECB’s announcement of Outright Monetary Transactions, which can complement ESM assistance.
Further, important progress has been made at both Member State and European levels to ensure financial stability. Scrutiny of EU financial institutions has been enhanced and they continue to increase their capital ratios in line with the European Banking Authority’s capital requirement. Member States have also contributed to bolstering the capital position of banks. The ECB’s refinancing stance also has been supportive in this process. Ireland’s progress in regard to financial stability initiatives is well-documented.
Aside from growth potential enhancing structural measures, a number of initiatives are to be implemented at EU level in order to boost growth. I believe the cumulative impact of all of these measures will have a positive impact in terms of supporting economic activity in the EU at this difficult juncture. This, in turn, can be expected to benefit Ireland, including given the importance of the EU as a trading partner.
Initiatives announced at EU level also include a deepening of the Single Market and reducing the regulatory burden. Another important measure is the mobilisation of EUR120 billion - about 1 per cent of EU gross national income - to boost European growth. These funds will be made available via EU structural funds, European Investment Bank lending, and the 2020 Project Bonds initiative, which entered its pilot phase this November. Constituting part of these efforts is a EUR10 billion paid-in capital increase for the EIB, a substantial boost to its lending capacity.
From a national perspective, we continue to make progress in terms of maximising the amount of funding that can be made available to Ireland in these regards. For instance, the EIB is an important source of funding to Ireland. Funds have amounted to an average of EUR500 million per annum covering commercial semi-states, local authorities, public private partnerships, and loans to banks for on-lending to SMEs. The Exchequer can also borrow directly from the EIB in respect of capital projects such as school-building. So far this year, the EIB has provided funding for a EUR100 million project for the purpose of building 550 classrooms across Ireland. The Bank also approved loan financing of EUR155 million for Bord Gais Energy. A further up to EUR200 million of part-financing of major Irish water supply and wastewater infrastructure investment for the period of 2012-15 was approved in late October and is due to be signed off on at the end of November. Projects currently under appraisal include EUR200 million for use in SME and mid-cap investment via AIB. On Friday 9 November the latest PPP project, Schools Bundle 3 was signed off on by all parties including the EIB which provided around EUR45 million loan funding for 8 new schools.
The Taoiseach, Ministers Noonan and Howlin, and EIB President Hoyer agreed during the EIB’s official visit to Ireland on 6th July to set-up a joint High Level Working Group (HLWG). The HLWG will explore how to ensure an enhanced contribution from the Bank by identifying concrete and flexible mechanisms to enhance the Bank’s support for Ireland’s growth agenda. This joint commitment to collaboration and a structured dialogue builds on existing EIB activity in Ireland, while also recognising the opportunities presented by the forthcoming increase in the Bank’s capital resources of EUR10 bn.
These opportunities will be used to help Ireland move beyond the crisis management of recent years and to plan for the creation of growth in the economy through key strategic investments in infrastructure and growth-enhancing initiatives, specifically those covered in the Government’s Infrastructure Stimulus package which was launched last July.
Question No. 50 answered with Question No. 7.