The Joint EU/IMF Programme of Financial Support for Ireland provides for a total financial package of €85 billion. Some €67½ billion comes from the European funding facilities — the European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism (EFSM) — bilateral loans from the UK, Sweden and Denmark and the International Monetary Fund's (IMF) Extended Fund Facility (EFF). The remaining €17½ billion comes from the State's own resources, namely the National Pensions Reserve Fund and other domestic cash sources. €35 billion of the total €85 billion financial support package was originally set aside for the banking sector with the remaining €50 billion available for the purpose of financing the State.
The recent banking stress tests carried out by the Central Bank identified an additional €24 billion in support to the banking sector as being required, including €3 billion of funds which take the form of contingent capital. However, it is anticipated that mitigating actions, such as burdening sharing, will mean that up to €5 billion of this €24 billion will not have to be provided by the State.
The budgetary forecasts contained in the recently published Stability Programme Update (SPU) prudently assume that an additional €20 billion in State support to the banking sector will be required. On that basis, therefore, some €15 billion of the funding originally earmarked for the banking sector is now available for use for sovereign purposes, bringing the potential total available for sovereign purposes to €65 billion. The combined Exchequer deficits for the years 2011-2013 are estimated at €48½ billion in the SPU. Maturing Government debt, both long-term and short-term, over the same period amounts to some €27 billion.
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 the 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 31 March 2011 and the associated recapitalisation exercise 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.
I should say that, 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.