Dáil Éireann Debate, Thursday - 28 February 2013
62. Deputy Thomas P. Broughan asked the Minister for Finance the remaining obligations, if any, Ireland has to the troika for budget 2014 under the terms of the 2010 bailout; if the backstop supports from the eurozone agencies, he recently referred to from January 2014, would come with further commitments to cut public services and raise taxes; and if he will make a statement on the matter. [10559/13]
View answerThe EU-IMF Programme of Financial Support is subject to policy conditionality which is set out in programme documents - the Memorandum of Understanding on Specific Economic Policy Conditionality (MOU), the Memorandum of Economic and Financial Policies (MEFP) and the Technical Memorandum of Understanding. The conditionality in these documents is subject to continuing assessment by the Irish Authorities and the EU, IMF, ECB (the Troika) to ensure the broad programme objectives are met. Such assessment is undertaken at the quarterly reviews. These reviews include discussions where programme commitments are updated and agreed after every mission. The most recent Programme Documents, dated November 2012, had a commitment to publish a budget in December 2012 and to achieve a specified level of consolidation. In addition, the Programme Documents, dated November 2012, have a commitment to specify as far as possible the tax and spending measures for the 2014–15 consolidation. These commitments were met with the publication of Budget 2013. The Programme Documents referred to are available on the department’s website. In relation to Budget 2014, the MoU does not contain explicit requirements. However, the EU Council Recommendation on our excessive deficit, dated 7 December 2010, provides for the reduction of our General Government Deficit to 5.1% in 2014 and to below 3% in 2015 and this requirement is referenced in the EU Council Implementing Decision on Ireland’s Programme of Financial Support also dated 7 December 2010. As is always the case, I will not be drawn into speculation on the composition of Budget 2014. Separately our EU membership requires us to bring our General Government deficit below 3% of GDP by 2015.
In relation to the backstop measures, both the IMF and the European Stability Mechanism (ESM) can provide precautionary financial assistance.
The ESM Treaty provides, in Article 14, that the Board of Governors may decide to grant precautionary financial assistance in the form of a precautionary conditioned credit line (PCCL) or in the form of an enhanced conditions credit line (ECCL). The Treaty also provides for the conditionality, terms and conditions to be attached to such assistance. Further information in relation to these instruments is available on the ESM website at http://www.esm.europa.eu/.
The IMF has a number of precautionary or standby type facilities including Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), the Extended Funding Facility (EFF) and the Stand By Arrangement (SBA). These different instruments are designed to address different sets of circumstances, and the terms and conditions attaching to them are structured accordingly. Further information on these instruments is available on the IMF website at http://www.imf.org/.
Initial discussions on exit options were held during the most recent mission (January 29th to February 7th) and provided some further clarity on the possible options that might be available. Ireland will be the first country to exit an EU/IMF programme of this type. It was agreed that these discussions should continue before the next mission, with a view to a more meaningful engagement on that mission. All relevant options will be considered in the light of what is appropriate for Ireland, including the terms and conditions attaching to them. Evidently this will require further consideration and no decisions have been taken to date.
