Dáil Éireann Debate, Thursday - 3 May 2012
75 Deputy Michael McGrath asked the Minister for Finance if he will confirm whether he has a veto on the establishment of the European Stability Mechanism; and if he will make a statement on the matter. [22513/12]
Amharc ar fhreagraA Treaty to establish the European Stability Mechanism (ESM) has been agreed among euro area countries. This is an intergovernmental treaty that stands outside the EU Treaty framework. The ESM Treaty will enter into force when ratified by signatories whose subscriptions represent 90% of the total initial subscriptions. The target date for the Treaty entering into force is 1 July 2012. Ireland's subscription will be 1.5922% of the total initial subscription. The Government considers that it is strongly in Ireland's best interests for the ESM Treaty to enter into force as soon as possible.
76 Deputy Michael McGrath asked the Minister for Finance if he will confirm the anticipated date that the European Financial Stability Facility will no longer accept new applications for funding and will be formally wound up. [22514/12]
Amharc ar fhreagraThe EFSF has been created as a temporary institution. The EFSF Framework agreement as amended provides that "Euro-area Member States which are potential Borrowers may only request and enter into Loan Facility Agreements up to 30 June 2013 (provided that Loans may be disbursed after this date under Loan Facility Agreements entered into prior to this date)." It also provides that EFSF guarantors shall only be required to issue a guarantee to facilitate the financing under Loan Facility Agreements entered into on or prior to 30 June 2013.
In accordance with its Articles of Association, the EFSF will be liquidated on the earliest date after 30 June 2013 on which there are no longer loans outstanding to a euro-area Member State and all Funding Instruments issued by EFSF and any reimbursement amounts due to Guarantors have been repaid in full. This means that after June 2013, EFSF would not enter into any new programmes but will continue the management and repayment of any outstanding debt and will close down once all outstanding debt has been repaid.
The Eurogroup's statement of 30 March 2012, provides that the ESM will be the main instrument to finance new programmes as from July 2012. The EFSF will, as a rule, only remain active in financing programmes that have started before that date. For a transitional period until mid-2013, it may engage in new programmes in order to ensure a full fresh lending capacity of EUR 500 billion for the ESM.
These arrangements form part of a number of initiatives. All these initiatives were made to improve the governance of the euro area through enhancements of the Stability and Growth Pact, the new macro-economic imbalances procedure, the Euro Plus Pact and the Fiscal Compact enshrined in the new Treaty on Stability, Cooperation and Governance in the Economic and Monetary Union. Finally, robust firewalls have been established. This comprehensive strategy has paid off and led to a significant improvement of market conditions.
